Brinker International Reports Increases In First Quarter Fiscal
2013 EPS And Comparable Restaurant Sales
DALLAS, Oct. 24, 2012 /PRNewswire/ -- Brinker
International, Inc. (NYSE: EAT) today announced results for the
fiscal first quarter ended Sept. 26,
2012.
Highlights include the following:
- Earnings per diluted share, excluding special items, increased
23.3 percent to $0.37 compared to
$0.30 for the first quarter of fiscal
2012 (see non-GAAP reconciliation below)
- On a GAAP basis, earnings per diluted share increased 28.6
percent to $0.36 compared to
$0.28 for the first quarter of fiscal
2012
- Chili's comparable restaurant sales increased 2.8 percent,
representing the sixth consecutive quarterly increase, and guest
traffic increased 0.4 percent, representing the seventh consecutive
quarterly increase
- Maggiano's comparable restaurant sales increased 0.9 percent,
representing the eleventh consecutive quarterly increase
- Company sales increased 2.5 percent to $663.7 million and restaurant operating
margin[1] improved approximately 150 basis
points to 14.6 percent from 13.1 percent
- The company repurchased approximately 2.5 million shares of its
common stock for $86.3 million in the
first quarter
- The company paid a dividend of 16
cents per share in the first quarter, an increase of 14.3
percent over the prior year quarter
- For the first three months of fiscal 2013, cash flows provided
by operating activities were $32.9
million and capital expenditures totaled $37.0 million
"Brinker delivered 23 percent EPS growth during the quarter by
increasing operational efficiencies and growing top line sales that
outpaced the industry," said Doug
Brooks, President and Chief Executive Officer. "Our long
term strategies continue to strengthen our business model, help us
drive more predictable and sustainable growth, and give us
confidence we'll deliver on our long term promise to double EPS to
$2.75 to $2.80."
[1] Effective for the fiscal first quarter ended
Sept. 26, 2012, revenues are reported
in two separate captions - Company sales and Franchise and other
revenues. Restaurant operating margin is now defined as Company
sales less Cost of sales, Restaurant labor and Restaurant
expenses.
Table
1: Monthly and Q1 comparable restaurant sales
Q1 13
and Q1 12, company-owned, reported brands and franchise;
percentage
|
|
Jul
|
Aug
|
Sep
|
Q1
13
|
Q1
12
|
Brinker
International
|
3.7
|
2.1
|
1.6
|
2.6
|
1.9
|
Chili's Company-Owned
|
|
|
|
|
|
Comparable Restaurant
Sales
|
3.9
|
2.0
|
2.2
|
2.8
|
1.7
|
Pricing Impact
|
1.3
|
1.4
|
1.5
|
1.4
|
1.3
|
Mix-Shift
|
1.6
|
1.1
|
0.0
|
1.0
|
(1.5)
|
Traffic
|
1.0
|
(0.5)
|
0.7
|
0.4
|
1.9
|
Maggiano's
|
|
|
|
|
|
Comparable Restaurant
Sales
|
2.2
|
2.7
|
(2.3)
|
0.9
|
3.5
|
Pricing Impact
|
2.7
|
2.6
|
2.3
|
2.6
|
1.8
|
Mix-Shift
|
1.1
|
1.0
|
0.6
|
0.8
|
(0.4)
|
Traffic
|
(1.6)
|
(0.9)
|
(5.2)
|
(2.5)
|
2.1
|
|
|
|
|
|
|
Franchise1
|
|
|
|
2.9
|
2.0
|
Domestic Comparable Restaurant Sales
|
|
|
|
3.7
|
0.2
|
International Comparable Restaurant Sales
|
|
|
|
1.1
|
7.5
|
|
|
|
|
|
|
System-wide2
|
|
|
|
2.7
|
2.0
|
1
|
Revenues
generated by franchisees are not included in revenues on the
consolidated statements of income; however, we generate royalty
revenue and advertising fees based on franchisee revenues, where
applicable. We believe including franchisee comparable restaurants
revenues provides investors information regarding brand performance
that is relevant to current operations and may impact future
restaurant development.
|
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 first quarter
company sales of $581.3 million
represent a 2.7 percent increase from $566.1
million in the prior year period driven by increased menu
prices, favorable mix shift and improved guest traffic. Restaurant
expense benefited from lower repair and maintenance expense, credit
card fees and utilities expense, as well as sales leverage on fixed
costs related to higher revenue. Restaurant labor was positively
impacted by sales leverage related to higher revenue and improved
labor productivity from the installation of new kitchen equipment,
partially offset by increased overtime incurred to support these
installations. Cost of sales was flat for the quarter as increased
menu pricing and favorable commodity pricing on produce, dairy and
poultry offset unfavorable commodity pricing and product mix
primarily related to meat.
MAGGIANO'S first quarter company sales of $82.4 million increased 0.9 percent, primarily
driven by menu pricing and mix. Restaurant operating margin
improved compared to prior year primarily due to improved cost of
sales. Cost of sales was favorably impacted by decreased commodity
usage from efforts to reduce waste, increased menu pricing and menu
item changes. Restaurant operating margin was also positively
impacted by lower credit card fees, utilities expense and sales
leverage on fixed costs related to higher revenue.
FRANCHISE AND OTHER revenues totaled $19.8 million for the quarter, a decrease of 3.9
percent over the prior year driven primarily by a decrease in gift
card breakage income due to increased gift card usage, partially
offset by an increase in royalty revenues. Domestic franchise
comparable restaurant sales increased 3.7 percent while
international comparable restaurant sales increased 1.1 percent.
Brinker franchisees generated approximately $399 million in sales1 for the first
quarter of fiscal 2013.
"During the first quarter, Brinker once again achieved positive
comp sales and margin improvement," said Guy Constant, Executive Vice President and Chief
Financial Officer. "Our balanced approach of delivering every day
value to our guests and increasing profitability in our restaurants
continues to drive ongoing shareholder value and create a strong
financial position for the company."
Other
Depreciation and amortization expense increased
$1.4 million for the quarter
primarily due to investments in existing restaurants and asset
replacements, partially offset by an increase in fully depreciated
assets.
General and administrative expense increased $4.5 million for the quarter primarily due to an
increase in stock-based and other compensation costs.
Excluding the impact of special items, the effective income tax
rate increased to 31.2 percent in the current quarter from 30.2
percent in the same quarter last year driven by increased earnings.
On a GAAP basis, the effective income tax rate increased to 31.1
percent in the current quarter as compared to 29.8 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
Q1 13
and Q1 12; $ millions and $ per diluted share
after-tax
|
|
Q1 13
|
EPS Q1
13
|
Q1 12
|
EPS Q1
12
|
Net
Income
|
27.9
|
0.36
|
23.6
|
0.28
|
Other (Gains) and Charges1
|
0.2
|
0.01
|
1.1
|
0.02
|
Net Income
excluding Special Items
|
28.1
|
0.37
|
24.7
|
0.30
|
|
|
|
|
|
1
|
Pre-tax
Other gains and charges was $0.4 million and $1.7 million in the
first quarter of fiscal 2013 and 2012, respectively.
|
1 Royalty revenues are recognized based on the sales
generated and reported to the company by franchisees.
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 broadcast live on the Brinker website
(www.brinker.com) at 9 a.m. CDT today
(Oct. 24). 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 Nov. 21,
2012.
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 first quarter fiscal 2013 filing on or before
Nov. 5, 2012; and
- Second quarter earnings release, before market opens,
Jan. 22, 2013.
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 1,585 restaurants under the names
Chili's® Grill & Bar (1,540 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
|
|
Sept. 26,
|
|
Sept. 28,
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
Company sales
|
$
663,668
|
|
$
647,755
|
Franchise and other revenues (a)
|
19,839
|
|
20,647
|
Total revenues
|
683,507
|
|
668,402
|
|
|
|
|
Operating Costs and Expenses:
|
|
|
|
Company restaurants
|
|
|
|
Cost of sales
|
184,695
|
|
181,618
|
Restaurant labor
|
218,866
|
|
215,945
|
Restaurant expenses
|
163,053
|
|
165,565
|
Company restaurant
expenses
|
566,614
|
|
563,128
|
Depreciation and
amortization
|
32,629
|
|
31,183
|
General and
administrative
|
37,273
|
|
32,819
|
Other gains and charges (b)
|
447
|
|
1,685
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
636,963
|
|
628,815
|
|
|
|
|
Operating income
|
46,544
|
|
39,587
|
|
|
|
|
Interest expense
|
6,889
|
|
7,048
|
Other, net
|
(797)
|
|
(1,092)
|
|
|
|
|
Income before provision for income taxes
|
40,452
|
|
33,631
|
|
|
|
|
Provision for
income taxes
|
12,588
|
|
10,010
|
|
|
|
|
|
|
|
|
Net income
|
$ 27,864
|
|
$ 23,621
|
|
|
|
|
|
|
|
|
Basic net income
per share
|
$ 0.38
|
|
$ 0.29
|
|
|
|
|
|
|
|
|
Diluted net
income per share
|
$ 0.36
|
|
$ 0.28
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
73,903
|
|
81,744
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
76,558
|
|
83,583
|
|
|
|
|
(a)
|
Franchise
and other revenues includes royalties, development fees and
franchise fees, banquet service charge income, and gift card
activity (breakage and discounts).
|
(b)
|
Current
quarter Other gains and charges primarily includes $0.4 million in
lease termination charges related to prior year closures. In the
first quarter of fiscal 2012, Other gains and charges primarily
includes a $2.5 million charge related to litigation and $0.7
million in lease termination charges, partially offset by a $1.3
million gain on the sale of land.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
Sept.
26,
|
June
27,
|
|
|
2012
|
2012
|
|
|
(Unaudited)
|
|
ASSETS
|
|
|
|
Current assets
|
|
$
190,639
|
$
194,846
|
Net property and equipment (a)
|
|
1,043,953
|
1,043,564
|
Total other assets
|
|
197,264
|
197,662
|
Total assets
|
|
$ 1,431,856
|
$ 1,436,072
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
Current installments of long-term
debt
|
|
$
27,397
|
$
27,334
|
Current liabilities
|
|
329,239
|
374,415
|
Long-term debt, less current
installments
|
|
671,031
|
587,890
|
Other liabilities
|
|
136,100
|
136,560
|
Total shareholders' equity
|
|
268,089
|
309,873
|
Total liabilities and shareholders'
equity
|
|
$ 1,431,856
|
$ 1,436,072
|
(a)
|
At Sept.
26, 2012, the company owned the land and buildings for 188 of the
865 company-owned restaurants. The net book values of the land and
buildings associated with these restaurants totaled $141.0 million
and $121.2 million, respectively.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(In
thousands)
|
|
|
|
|
Sept. 26,
|
Sept.
28,
|
|
2012
|
2011
|
Cash Flows From Operating Activities:
|
|
|
Net income
|
$
27,864
|
$
23,621
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
Depreciation and amortization
|
32,629
|
31,183
|
Restructure charges and other impairments
|
447
|
3,029
|
Stock-based compensation
|
6,521
|
3,918
|
Net loss (gain) on disposal of assets
|
945
|
(364)
|
Changes in assets and liabilities
|
(35,466)
|
(30,534)
|
Net cash provided by operating activities
|
32,940
|
30,853
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
Payments for property and equipment
|
(37,001)
|
(27,662)
|
Proceeds from sale of assets
|
649
|
2,523
|
Investment in equity method investees
|
-
|
(729)
|
Net cash used in investing activities
|
(36,352)
|
(25,868)
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
Borrowings on revolving credit facility
|
90,000
|
-
|
Purchases of treasury stock
|
(86,331)
|
(77,822)
|
Proceeds from issuances of treasury stock
|
17,855
|
3,449
|
Payments of dividends
|
(12,803)
|
(12,222)
|
Payments on long-term debt
|
(6,595)
|
(5,312)
|
Excess tax benefits from stock-based
compensation
|
6,493
|
662
|
Proceeds from issuance of long-term debt
|
-
|
70,000
|
Payments for deferred financing costs
|
-
|
(1,620)
|
Net cash provided by (used in) financing
activities
|
8,619
|
(22,865)
|
|
|
|
Net change in cash and cash equivalents
|
5,207
|
(17,880)
|
Cash and cash equivalents at beginning of
period
|
59,103
|
81,988
|
Cash and cash equivalents at end of period
|
$ 64,310
|
$ 64,108
|
BRINKER
INTERNATIONAL, INC.
|
RESTAURANT SUMMARY
|
|
|
|
|
|
First
Quarter
Net
Openings/(Closings)
|
Total
Restaurants
|
Projected
Openings
|
|
Fiscal
2013
|
Sept. 26,
2012
|
Fiscal
2013
|
|
|
|
|
Company-Owned
Restaurants:
|
|
|
|
Chili's
|
-
|
821
|
-
|
Maggiano's
|
-
|
44
|
-
|
|
-
|
865
|
-
|
|
|
|
|
Franchise
Restaurants:
|
|
|
|
Chili's
|
(5)
|
453
|
2-3
|
International (a)
|
9
|
267
|
30-35
|
|
4
|
720
|
32-38
|
|
|
|
|
Total Restaurants:
|
|
|
|
Chili's
|
(5)
|
1,274
|
2-3
|
Maggiano's
|
-
|
44
|
-
|
International (a)
|
9
|
267
|
30-35
|
|
4
|
1,585
|
32-38
|
(a)
|
At Sept.
26, 2012, international franchise restaurants by brand were 266
Chili's and one Maggiano's.
|
SOURCE Brinker International, Inc.