DALLAS, Oct. 21, 2014 /PRNewswire/ -- Brinker
International, Inc. (NYSE: EAT) today announced results for the
fiscal first quarter ended Sept. 24,
2014.
Highlights include the following:
- Earnings per diluted share, excluding special items, increased
16.3 percent to $0.50 compared to
$0.43 for the first quarter of fiscal
2014
- On a GAAP basis, earnings per diluted share increased 16.7
percent to $0.49 compared to
$0.42 for the first quarter of fiscal
2014
- Brinker International company sales increased 3.4 percent to
$686.9 million and comparable
restaurant sales at company-owned restaurants increased 2.4
percent
- Chili's company-owned comparable restaurant sales increased 2.6
percent and traffic increased 0.1 percent
- Maggiano's comparable restaurant sales increased 0.6 percent,
representing the 19th consecutive quarterly increase and traffic
increased 0.9 percent
- Chili's franchise comparable restaurant sales increase of 1.0
percent includes a 1.7 percent increase for U.S. franchise
restaurants, partially offset by a 0.5 percent decrease for
international franchise restaurants
- Brinker's operating income, excluding special
items,1 as a percentage of total
revenues improved 50 basis points from 7.3 percent to 7.8
percent
- For the first three months of fiscal 2015, cash flows provided
by operating activities were $70.9
million and capital expenditures totaled $40.2 million
- The company repurchased approximately 1.1 million shares of its
common stock for $53.3 million in the
first quarter
- The company paid a dividend of 24
cents per share in the first quarter, an increase of 20
percent over the prior year first quarter, and declared a dividend
of 28 cents per share to be paid in
the second quarter
"Brinker delivered positive comp sales and traffic during the
quarter and we continue to take market share," said Wyman Roberts, Chief Executive Officer and
President. "The key to our successful results is our ability to
drive relevance and differentiation while maintaining a strong
business model."
1
Operating income, excluding special items, is defined as Operating
income excluding Other gains and charges.
|
Table 1: Q1
comparable restaurant sales Q1 F15 and Q1 F14,
company-owned, reported brands and franchise;
percentage
|
|
|
Q1
15
|
|
Q1
14
|
Brinker
International
|
2.4
|
|
(1.3)
|
Chili's
Company-Owned1
|
|
|
|
Comparable Restaurant
Sales
|
2.6
|
|
(1.6)
|
Pricing Impact
|
1.8
|
|
0.9
|
Mix-Shift
|
0.7
|
|
0.9
|
Traffic
|
0.1
|
|
(3.4)
|
Maggiano's
|
|
|
|
Comparable Restaurant
Sales
|
0.6
|
|
0.6
|
Pricing Impact
|
1.5
|
|
0.6
|
Mix-Shift
|
(1.8)
|
|
2.1
|
Traffic
|
0.9
|
|
(2.1)
|
|
|
|
|
Chili's
Franchise2
|
1.0
|
|
(1.0)
|
U.S.
Comparable Restaurant Sales
|
1.7
|
|
(2.6)
|
International
Comparable Restaurant Sales
|
(0.5)
|
|
2.7
|
|
|
|
|
Chili's
Domestic3
|
2.3
|
|
(1.9)
|
System-wide4
|
1.9
|
|
(1.2)
|
1
|
Chili's company-owned
comparable restaurant sales do not include sales generated by the
12 Canadian restaurants. Acquired or newly opened restaurants are
not included in this calculation until 18 months of operations are
completed.
|
2
|
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 franchisee comparable restaurant
sales provides investors information regarding brand performance
that is relevant to current operations and may impact future
restaurant development.
|
3
|
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.
|
4
|
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 first quarter
company sales increased to $600.1
million from $581.6 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. Cost of
sales, as a percent of company sales, was favorably impacted by
menu pricing, menu item changes, efficiency gains related to new
fryer equipment, and improved waste control, partially offset by
unfavorable pricing primarily related to burger meat, cheese and
avocados which are market based, as well as unfavorable pricing
related to seafood. Restaurant expenses, as a percent of company
sales, increased due to equipment charges associated with tabletop
devices2 and higher credit card fees, partially offset
by leverage related to higher company sales. Restaurant labor, as a
percent of company sales, was negatively impacted by higher
restaurant manager bonuses and increased wage and payroll tax
rates, partially offset by favorable health insurance expenses
coupled with leverage related to higher company sales.
MAGGIANO'S first quarter company sales of $86.8 million increased 4.7 percent primarily
driven by increases in restaurant capacity, menu pricing and
traffic. As compared to the prior year, Maggiano's restaurant
operating margin was negatively impacted by new restaurant
development and higher supplies and utilities expenses. Cost of
sales, as a percent of company sales, was negatively impacted by
commodity pricing on seafood, butter and cheese, coupled with menu
item changes, partially offset by increased menu pricing and
favorable commodity pricing on oils. Restaurant labor, as a percent
of company sales, remained flat compared to the prior year.
1
Restaurant operating margin is defined as Company sales less Cost
of sales, Restaurant labor and Restaurant expenses.
|
|
2 As
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 totaled $24.2 million for the first quarter, an increase
of 19.8 percent compared to $20.2
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 international royalty
income due to international franchise restaurant openings. U.S.
franchise comparable restaurant sales increased 1.7 percent, while
international comparable restaurant sales decreased 0.5 percent.
Brinker franchisees generated approximately $397 million in sales3 for the first
quarter of fiscal 2015.
3 Royalty
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, fryer
equipment and new restaurant openings, partially offset by an
increase in fully depreciated assets.
General and administrative expense decreased $1.8 million primarily due to a special
stock-based compensation grant in the prior year and lower
professional fees related to litigation.
On a GAAP basis, the effective income tax rate increased to 31.5
percent in the current quarter from 31.4 percent in the prior year
quarter primarily due to increased earnings, partially offset by a
net increase in Federal credits. Excluding the impact of special
items, the effective income tax rate increased to 31.7 percent in
the current quarter compared to 31.6 percent in the prior year
primarily due to increased earnings, partially offset by a net
increase in Federal credits.
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 first quarter of fiscal 2015 consist primarily of
charges associated with closed restaurants.
Table 2:
Reconciliation of net income excluding special items
|
Q1 15 and Q1 14; $
millions and $ per diluted share after-tax
|
|
|
Q1
15
|
|
EPS Q1
15
|
|
Q1
14
|
|
EPS Q1
14
|
Net Income
|
32.7
|
|
0.49
|
|
29.2
|
|
0.42
|
Other (Gains) and
Charges, net of taxes1
|
0.6
|
|
0.01
|
|
0.6
|
|
0.01
|
Net Income excluding
Special Items
|
33.3
|
|
0.50
|
|
29.8
|
|
0.43
|
|
|
1
|
Pre-tax Other gains
and charges were $0.9 million and $1.0 million in the first quarter
of fiscal 2015 and 2014, respectively.
|
|
|
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 (Oct. 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 Nov. 25, 2014.
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 2015 filing on or before Nov.
3, 2014; and
- Second quarter earnings release, before market opens,
Jan. 28, 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 Sept. 24, 2014, Brinker owned,
operated, or franchised 1,622 restaurants under the names
Chili's® Grill & Bar (1,574 restaurants) and
Maggiano's Little Italy® (48 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 and inflation.
BRINKER
INTERNATIONAL, INC.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(In thousands,
except per share amounts)
(Unaudited)
|
|
|
|
Thirteen Week
Period Ended
|
|
|
Sept. 24,
2014
|
|
Sept. 25,
2013
|
Revenues:
|
|
|
|
|
Company
sales
|
|
$
|
686,864
|
|
$
|
664,502
|
Franchise and other
revenues (a)
|
|
24,154
|
|
20,158
|
Total
revenues
|
|
711,018
|
|
684,660
|
Operating costs and
expenses:
|
|
|
|
|
Company restaurants
(excluding depreciation and amortization)
|
|
|
|
|
Cost of
sales
|
|
184,785
|
|
180,658
|
Restaurant
labor
|
|
227,276
|
|
218,716
|
Restaurant
expenses
|
|
175,538
|
|
167,690
|
Company restaurant
expenses
|
|
587,599
|
|
567,064
|
Depreciation and
amortization
|
|
35,542
|
|
33,156
|
General and
administrative
|
|
32,634
|
|
34,421
|
Other gains and
charges
|
|
933
|
|
1,006
|
Total operating costs
and expenses
|
|
656,708
|
|
635,647
|
Operating
income
|
|
54,310
|
|
49,013
|
Interest
expense
|
|
6,999
|
|
7,013
|
Other, net
|
|
(503)
|
|
(582)
|
Income before
provision for income taxes
|
|
47,814
|
|
42,582
|
Provision for income
taxes
|
|
15,076
|
|
13,370
|
Net income
|
|
$
|
32,738
|
|
$
|
29,212
|
|
|
|
|
|
Basic net income per
share
|
|
$
|
0.51
|
|
$
|
0.44
|
|
|
|
|
|
Diluted net income
per share
|
|
$
|
0.49
|
|
$
|
0.42
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
64,668
|
|
66,693
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
|
66,263
|
|
68,802
|
|
|
|
|
|
Other comprehensive
income (loss):
|
|
|
|
|
Foreign currency
translation adjustment (b)
|
|
$
|
(807)
|
|
$
|
65
|
Other comprehensive
income (loss)
|
|
(807)
|
|
65
|
Comprehensive
income
|
|
$
|
31,931
|
|
$
|
29,277
|
|
|
|
|
|
(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 statement of
comprehensive income. This income was previously included in
Restaurant expenses. The prior year consolidated statement of
comprehensive income has been adjusted to conform to the fiscal
2015 presentation. This adjustment has no effect on net income
previously reported.
|
|
|
(b)
|
The company's
Canadian operation uses the Canadian dollar as its functional
currency. The foreign currency translation adjustment included in
the company's comprehensive income represents the unrealized impact
of translating the financial statements of the Canadian entity to
U.S. dollars. This amount is not included in net income and would
only be realized upon disposition of the business.
|
BRINKER
INTERNATIONAL, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands)
(Unaudited)
|
|
|
Sept. 24,
2014
|
|
June 25,
2014
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets
|
$
|
201,107
|
|
$
|
210,854
|
Net property and
equipment (a)
|
1,050,476
|
|
1,056,454
|
Total other
assets
|
224,628
|
|
223,296
|
Total
assets
|
$
|
1,476,211
|
|
$
|
1,490,604
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current installments
of long-term debt
|
$
|
27,959
|
|
$
|
27,884
|
Current
liabilities
|
412,938
|
|
438,226
|
Long-term debt, less
current installments
|
865,272
|
|
832,302
|
Other
liabilities
|
131,861
|
|
129,098
|
Total shareholders'
equity
|
38,181
|
|
63,094
|
Total liabilities and
shareholders' equity
|
$
|
1,476,211
|
|
$
|
1,490,604
|
|
|
(a)
|
At Sept. 24, 2014,
the company owned the land and buildings for 189 of the 886
company-owned restaurants. The net book values of the land and
buildings associated with these restaurants totaled $142.2 million
and $120.8 million, respectively.
|
BRINKER
INTERNATIONAL, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands)
(Unaudited)
|
|
|
|
Thirteen Week
Period Ended
|
|
|
Sept. 24,
2014
|
|
Sept. 25,
2013
|
Cash Flows From
Operating Activities:
|
|
|
|
|
Net income
|
|
$
|
32,738
|
|
$
|
29,212
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
35,542
|
|
33,156
|
Stock-based
compensation
|
|
3,788
|
|
5,000
|
Restructure charges
and other impairments
|
|
933
|
|
640
|
Net loss on disposal
of assets
|
|
714
|
|
1,199
|
Changes in assets and
liabilities
|
|
(2,817)
|
|
(13,791)
|
Net cash provided by
operating activities
|
|
70,898
|
|
55,416
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Payments for property
and equipment
|
|
(40,183)
|
|
(29,844)
|
Proceeds from sale of
assets
|
|
1,216
|
|
—
|
Net cash used in
investing activities
|
|
(38,967)
|
|
(29,844)
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Purchases of treasury
stock
|
|
(53,316)
|
|
(66,301)
|
Borrowings on
revolving credit facility
|
|
40,000
|
|
60,000
|
Payments on revolving
credit facility
|
|
—
|
|
(20,000)
|
Payments of
dividends
|
|
(17,198)
|
|
(15,281)
|
Excess tax benefits
from stock-based compensation
|
|
9,376
|
|
13,924
|
Payments on long-term
debt
|
|
(6,669)
|
|
(6,630)
|
Proceeds from
issuances of treasury stock
|
|
1,882
|
|
4,953
|
Net cash used in
financing activities
|
|
(25,925)
|
|
(29,335)
|
Net change in cash
and cash equivalents
|
|
6,006
|
|
(3,763)
|
Cash and cash
equivalents at beginning of period
|
|
57,685
|
|
59,367
|
Cash and cash
equivalents at end of period
|
|
$
|
63,691
|
|
$
|
55,604
|
BRINKER
INTERNATIONAL, INC.
RESTAURANT
SUMMARY
|
|
|
|
First Quarter
Openings
Fiscal
2015
|
|
Total Restaurants Sept. 24, 2014
|
|
Projected
Openings
Fiscal 2015
|
Company-Owned
Restaurants:
|
|
|
|
|
|
|
Chili's
Domestic
|
|
1
|
|
824
|
|
8-10
|
Chili's
International
|
|
—
|
|
14
|
|
1
|
Maggiano's
|
|
2
|
|
48
|
|
3
|
|
|
3
|
|
886
|
|
12-14
|
Franchise
Restaurants:
|
|
|
|
|
|
|
Chili's
Domestic
|
|
3
|
|
439
|
|
5
|
Chili's
International
|
|
6
|
|
297
|
|
34-38
|
|
|
9
|
|
736
|
|
39-43
|
Total
Restaurants:
|
|
|
|
|
|
|
Chili's
Domestic
|
|
4
|
|
1,263
|
|
13-15
|
Chili's
International
|
|
6
|
|
311
|
|
35-39
|
Maggiano's
|
|
2
|
|
48
|
|
3
|
|
|
12
|
|
1,622
|
|
51-57
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/brinker-international-reports-increases-in-first-quarter-fiscal-2015-eps-comparable-restaurant-sales-and-traffic-770004696.html
SOURCE Brinker International