DALLAS, April 23, 2012 /PRNewswire/ -- Brinker
International, Inc. (NYSE: EAT) today announced results for the
fiscal third quarter ended March 28,
2012.
Highlights for the third quarter of fiscal 2012 include the
following:
- Earnings per diluted share, excluding special items, increased
27.7 percent to $0.60 compared to
$0.47 for the third quarter of fiscal
2011 (see non-GAAP reconciliation below)
- On a GAAP basis, earnings per diluted share increased 24.4
percent to $0.56 from $0.45 in the third quarter of the prior year
- Chili's comparable restaurant sales increased 4.6 percent,
representing the fourth consecutive quarterly increase, and
customer traffic increased 1.8 percent, representing the fifth
consecutive quarterly increase
- Maggiano's comparable restaurant sales increased 3.9 percent,
representing the ninth consecutive quarterly increase, and customer
traffic increased by 1.5 percent, representing the tenth
consecutive quarterly increase
- The company recognized a $5.2
million reduction in revenues in the third quarter of fiscal
2012 resulting from a change in the estimate of gift card breakage
due to an increase in gift card redemption experience. Comparable
restaurant sales were not impacted
- Excluding the $5.2 million gift
card breakage adjustment, total revenues increased 4.2 percent and
restaurant operating margin(1) improved 100 basis points to 19.3
percent compared to the third quarter of fiscal 2011. On a GAAP
basis, total revenues increased 3.5 percent to $742.0 million and restaurant operating margin
improved 40 basis points to 18.7 percent
- The company repurchased approximately 3.1 million shares of its
common stock for $82.7 million in the
third quarter
- The company paid a dividend of 16
cents per share in the third quarter, an increase of 14.3
percent over the prior year quarter
- For the first nine months of fiscal 2012, cash flows provided
by operating activities were $233.8
million and capital expenditures totaled $85.2 million
"Brinker just achieved its fifth consecutive quarter of positive
sales and traffic growth, demonstrating the effectiveness of our
top line strategies and our ability to take market share," said
Doug Brooks, President and Chief
Executive Officer. "We also continue to improve the middle of the
P&L, further strengthening our business model. These
factors combined with returning value to shareholders through share
repurchases make us confident we'll deliver on our promise to
double EPS by 2015 to $2.75 to
$2.80."
Table
1: Monthly and Q3 comparable restaurant sales
Q3 12
and Q3 11, company-owned, reported brands and franchise;
percentage
|
|
Jan
|
Feb
|
March
|
Q3
12
|
Q3
11
|
Brinker
International
|
5.9
|
4.3
|
3.1
|
4.5
|
0.1
|
Chili's Company-Owned
|
|
|
|
|
|
Comparable Restaurant
Sales
|
5.8
|
4.4
|
3.5
|
4.6
|
(0.3)
|
Pricing Impact
|
1.7
|
2.2
|
2.0
|
1.9
|
1.2
|
Mix-Shift
|
0.7
|
1.1
|
1.0
|
0.9
|
(1.7)
|
Traffic
|
3.4
|
1.1
|
0.5
|
1.8
|
0.2
|
Maggiano's
|
|
|
|
|
|
Comparable Restaurant
Sales
|
6.8
|
4.2
|
0.1
|
3.9
|
3.4
|
Pricing Impact
|
1.2
|
2.8
|
2.9
|
2.2
|
0.7
|
Mix-Shift
|
(0.2)
|
0.5
|
0.6
|
0.2
|
(0.6)
|
Traffic
|
5.8
|
0.9
|
(3.4)
|
1.5
|
3.3
|
|
|
|
|
|
|
Franchise(1)
|
|
|
|
3.5
|
(0.9)
|
Domestic Comparable Restaurant Sales
|
|
|
|
3.8
|
(2.0)
|
International Comparable Restaurant Sales
|
|
|
|
2.6
|
2.6
|
|
|
|
|
|
|
System-wide(2)
|
|
|
|
4.2
|
(0.2)
|
|
(1)
|
Although
franchise comparable sales are not derived from sales attributable
to the company, including franchise comparable restaurant sales
provides investors information regarding brand performance that is
relevant to current operations and may impact future restaurant
development. The company generates royalty revenue and advertising
fees based on franchisee sales, where applicable.
|
|
|
(2)
|
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 franchisee
operated restaurants.
|
Quarterly Operating Performance
CHILI'S third quarter revenues of $629.9
million represent a 3.5 percent increase from $608.4 million in the prior year period driven by
increased menu prices and improved guest traffic. The gift card
breakage adjustment reduced Chili's revenues by $4.5 million and adversely affected the brand's
restaurant operating margin by 60 basis points.
Excluding the impact of the gift card breakage adjustment,
Chili's restaurant operating margin improved 90 basis points.
Restaurant expense benefited from sales leverage on fixed costs
related to higher revenue, lower repair and maintenance expense,
credit card fees and utilities expense. Restaurant labor was
positively impacted by improved labor productivity related to the
installation of new kitchen equipment. Cost of sales was negatively
impacted by unfavorable pricing on beef, oils and dairy, partially
offset by favorable pricing on produce and poultry.
MAGGIANO'S third quarter revenues of $94.7 million increased 3.4 percent primarily
driven by increased menu prices and improved traffic, partially
offset by a $0.7 million reduction
related to the gift card breakage adjustment. Restaurant operating
margin improved compared to prior year primarily due to improved
cost of sales resulting from menu changes and pricing, partially
offset by unfavorable commodity pricing. Restaurant operating
margin was also positively impacted by sales leverage on fixed
costs related to higher revenue. Excluding the impact of the gift
card breakage adjustment, Maggiano's restaurant operating margin
improved 100 basis points.
ROYALTY AND FRANCHISE revenues totaled $17.4 million for the quarter, an increase of 1.8
percent over the prior year driven primarily by seven net openings
since the third quarter of fiscal 2011. Domestic franchise
comparable restaurant sales increased 3.8 percent while
international comparable restaurant sales increased 2.6 percent.
Brinker franchisees generated $415
million in sales(2) for the third quarter of fiscal 2012, an
increase of 3.5 percent over the prior year.
"We achieved a 100 basis point improvement in margins during the
third quarter, driven by our strategy to make our existing brands
more compelling and relevant while operating more efficiently,"
said Guy Constant, Executive Vice
President and Chief Financial Officer. "Based on our current
trajectory and plans to complete the rollout of our strategic
initiatives, we anticipate achieving more than half of our 400
basis point goal by June 2012."
Other
General and administrative expense increased $4.4 million for the quarter primarily due to an
increase in performance based compensation and a decrease in income
resulting from the expiration of the transition services agreements
with Macaroni Grill and On The Border.
Interest expense decreased $0.6
million for the quarter primarily due to lower interest
rates.
Excluding the impact of special items, the effective income tax
rate increased to 28.9 percent in the current quarter from 27.1
percent in the same quarter last year driven by increased earnings.
On a GAAP basis, the effective income tax rate increased to 28.2
percent in the current quarter as compared to 27.5 percent in the
same quarter last year primarily due to increased earnings.
Non-GAAP Reconciliation
The company 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.
Table
2: Reconciliation of net income excluding special
items
Q3 12
and Q3 11; $ millions and $ per diluted share
after-tax
|
|
Q3 12
|
EPS
Q3 12
|
Q3 11
|
EPS
Q3 11
|
Net
Income
|
44.9
|
0.56
|
40.2
|
0.45
|
Other (Gains) and Charges(1)
|
(0.1)
|
0.00
|
1.5
|
0.02
|
Adjustment for Gift Card Breakage(2)
|
3.3
|
0.04
|
-
|
-
|
Adjustment for Tax Items
|
-
|
-
|
0.5
|
0.00
|
Net Income
excluding Special Items
|
48.1
|
0.60
|
42.2
|
0.47
|
|
|
|
|
|
(1)
|
Pre-tax
Other gains and charges was a $0.1 million gain and a $2.4 million
charge in the third quarter of fiscal 2012 and 2011,
respectively.
|
|
|
(2)
|
The
company recognized a pre-tax $5.2 million reduction to revenue in
the third quarter of fiscal 2012 resulting from a change in the
estimate of gift card breakage.
|
Guidance Policy
Brinker provides annual guidance as it relates to comparable
restaurant sales, earnings per diluted share, and other key line
items in the 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 be broadcast live on the Brinker
website (www.brinker.com) at 9 a.m.
CDT today (April 23). 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, 2012.
Additional financial information, including statements of income
which detail operations excluding special items, franchise
development and royalty fees, 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 2012 filing on or before
May 7, 2012; and
- Fourth quarter earnings release, before market opens,
Aug. 9, 2012.
About Brinker
Brinker International Inc. is one of the world's leading casual
dining restaurant companies. Founded in 1975 and based in
Dallas, Texas, Brinker currently
owns, operates, or franchises 1,574 restaurants under the names
Chili's® Grill & Bar (1,529 restaurants) and Maggiano's Little
Italy® (45 restaurants). Brinker also holds a minority investment
in Romano's Macaroni Grill®.
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, adverse weather conditions, future commodity
prices, product availability, fuel and utility costs and
availability, terrorists 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 and inflation.
BRINKER INTERNATIONAL, INC.
|
CONSOLIDATED STATEMENTS OF INCOME
|
(In
thousands, except per share amounts)
|
(Unaudited)
|
|
|
Thirteen Week Periods Ended
|
Thirty-Nine Week Periods Ended
|
|
March 28,
|
March 30,
|
March 28,
|
March 30,
|
|
2012
|
2011
|
2012
|
2011
|
|
|
|
|
|
Revenues
|
$
742,045
|
$
717,119
|
$2,092,351
|
$
2,043,898
|
Operating Costs and Expenses:
|
|
|
|
|
Cost of sales
|
205,155
|
195,182
|
571,962
|
548,960
|
Restaurant labor (a)
|
233,806
|
227,821
|
664,068
|
658,432
|
Restaurant expenses
|
164,230
|
163,007
|
489,872
|
490,206
|
Depreciation and amortization
|
30,929
|
31,858
|
93,265
|
96,883
|
General and administrative
|
40,006
|
35,593
|
104,040
|
97,024
|
Other gains and charges (b)
|
(104)
|
2,424
|
5,614
|
8,318
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
674,022
|
655,885
|
1,928,821
|
1,899,823
|
|
|
|
|
|
Operating income
|
68,023
|
61,234
|
163,530
|
144,075
|
|
|
|
|
|
Interest expense
|
6,530
|
7,179
|
20,087
|
21,409
|
Other, net
|
(1,072)
|
(1,444)
|
(3,018)
|
(5,178)
|
|
|
|
|
|
Income before provision for income taxes
|
62,565
|
55,499
|
146,461
|
127,844
|
|
|
|
|
|
Provision for income taxes
|
17,632
|
15,253
|
42,233
|
28,703
|
|
|
|
|
|
Net
Income
|
$ 44,933
|
$ 40,246
|
$ 104,228
|
$ 99,141
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share
|
$ 0.58
|
$ 0.46
|
$ 1.31
|
$ 1.06
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per
share
|
$ 0.56
|
$ 0.45
|
$ 1.28
|
$ 1.05
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
77,582
|
87,679
|
79,722
|
93,112
|
|
|
|
|
|
Diluted weighted average shares
outstanding
|
79,735
|
89,647
|
81,658
|
94,456
|
|
|
|
|
|
(a)
|
Restaurant
labor includes all compensation related expenses, including
benefits and incentive compensation, for restaurant employees at
the general manager level and below. Labor related expenses
attributable to multi-restaurant (or above-restaurant) supervision
is included in Restaurant expenses.
|
|
(b)
|
In the
first nine months of fiscal 2012, Other gains and charges includes
$1.1 million of charges related to the impairment of certain
underperforming restaurants, lease termination charges of $3.2
million, litigation charges of $1.3 million and long-lived asset
impairment charges of $0.4 million resulting from closures. These
charges were partially offset by a $1.3 million gain related to the
sale of land. In the third quarter of fiscal 2011, Other gains and
charges primarily includes $1.5 million related to litigation and
$0.9 million of severance costs. In the first six months of fiscal
2011, Other gains and charges primarily includes $3.7 million of
severance costs, $1.1 million of charges related to the impairment
of underperforming restaurants and long-lived asset impairment
charges of $0.6 million resulting from closures.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
March
28,
|
June
29,
|
|
|
2012
|
2011
|
|
|
(Unaudited)
|
|
ASSETS
|
|
|
|
Current assets
|
|
$
202,357
|
$
221,360
|
Net property and equipment (a)
|
|
1,037,443
|
1,056,279
|
Total other assets
|
|
198,366
|
206,929
|
Total assets
|
|
$ 1,438,166
|
$ 1,484,568
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
Current installments of long-term
debt
|
|
$
27,272
|
$
22,091
|
Current liabilities
|
|
383,732
|
383,510
|
Long-term debt, less current
installments
|
|
554,687
|
502,572
|
Other liabilities
|
|
138,761
|
137,485
|
Total shareholders' equity
|
|
333,714
|
438,910
|
Total liabilities and shareholders'
equity
|
|
$ 1,438,166
|
$ 1,484,568
|
|
|
|
|
(a)
|
At March
28, 2012, the company owned the land and buildings for 188 of the
864 company-owned restaurants. The net book values of the land and
buildings associated with these restaurants totaled $141.8 million
and $125.6 million, respectively.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
March 28,
|
March
30,
|
|
2012
|
2011
|
Cash Flows From Operating Activities:
|
|
|
Net income
|
$104,228
|
$
99,141
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
Depreciation and amortization
|
93,265
|
96,883
|
Restructure charges and other impairments
|
5,042
|
6,285
|
Stock-based compensation
|
10,393
|
9,604
|
Net loss (gain) on disposal of assets
|
1,541
|
(1,198)
|
Changes in assets and liabilities
|
19,341
|
(22,542)
|
Net cash provided by operating activities
|
233,810
|
188,173
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
Payments for property and equipment
|
(85,177)
|
(48,892)
|
Proceeds from sale of assets
|
4,344
|
8,696
|
Investment in equity method investees
|
(1,083)
|
(1,921)
|
Net cash used in investing activities
|
(81,916)
|
(42,117)
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
Purchases of treasury
stock
|
(208,347)
|
(358,983)
|
Proceeds from issuance of long-term debt
|
70,000
|
-
|
Payments of dividends
|
(37,850)
|
(40,996)
|
Proceeds from issuances of treasury stock
|
27,946
|
26,851
|
Payments on long-term debt
|
(12,187)
|
(10,846)
|
Payments for deferred financing costs
|
(1,620)
|
-
|
Excess tax benefits from stock-based
compensation
|
924
|
243
|
Net cash used in financing activities
|
(161,134)
|
(383,731)
|
|
|
|
Net change in cash and cash
equivalents
|
(9,240)
|
(237,675)
|
Cash and cash equivalents at beginning of
period
|
81,988
|
344,624
|
Cash and cash equivalents at end of
period
|
$ 72,748
|
$ 106,949
|
BRINKER
INTERNATIONAL, INC.
|
RESTAURANT SUMMARY
|
|
|
|
|
|
Third
Quarter
Net
Openings/(Closings)
|
Total
Restaurants
|
Projected
Openings
|
|
Fiscal
2012
|
March 28,
2012
|
Fiscal
2012
|
|
|
|
|
Company-Owned
Restaurants:
|
|
|
|
Chili's
|
(1)
|
820
|
-
|
Maggiano's
|
-
|
44
|
-
|
|
(1)
|
864
|
-
|
|
|
|
|
Franchise
Restaurants:
|
|
|
|
Chili's
|
(5)
|
462
|
4
|
International (a)
|
6
|
248
|
33-35
|
|
1
|
710
|
37-39
|
|
|
|
|
Total Restaurants:
|
|
|
|
Chili's
|
(6)
|
1,282
|
4
|
Maggiano's
|
-
|
44
|
-
|
International (a)
|
6
|
248
|
33-35
|
|
-
|
1,574
|
37-39
|
|
|
|
|
(a)
|
At March
28, 2012, international franchise restaurants by brand were 247
Chili's and one Maggiano's.
|
(1) Restaurant operating margin is defined as Revenues less Cost
of sales, Restaurant labor and Restaurant expenses.
(2) Royalty revenues are recognized based on the sales generated
and reported to the company by its franchisees.
SOURCE Brinker International, Inc.