DALLAS, Jan. 25, 2011 /PRNewswire/ -- Brinker
International, Inc. (NYSE: EAT) today announced results for the
fiscal second quarter ended Dec. 29,
2010.
Highlights for the second quarter of fiscal 2011 include the
following:
- Earnings per diluted share, before special items, increased to
$0.38 compared to $0.25 for the second quarter of fiscal 2010 (see
non-GAAP reconciliation below)
- On a GAAP basis, earnings per diluted share increased to
$0.41 from $0.18 in the second quarter of the prior
year
- Restaurant operating margin(1) improved 210 basis points to
17.4 percent
- Total revenues decreased 4.8 percent to $671.9 million
- Same restaurant sales at company-owned restaurants decreased
3.5 percent consisting of a 4.9 percent decrease at Chili's and a
4.7 percent increase at Maggiano's
- Cash flows provided by operating activities were $70.0 million and capital expenditures totaled
$31.8 million for the first six
months of fiscal 2011
- The Company repurchased approximately 8.3 million shares of its
common stock for $157.2 million in
the second quarter resulting in a fiscal year to date total of
approximately 13.6 million shares for $249.9
million
- The Company paid a dividend of 14
cents per share, an increase of 27.3 percent over the prior
year quarter
"Our second quarter results demonstrate progress made on our
commitment to double EPS in five years," said Doug Brooks, President and Chief Executive
Officer. "We've gained this traction through continued margin
expansion at Chili's, top line growth at Maggiano's and investments
in our business designed to generate profitable and sustainable
long term sales growth."
Table 1: Q2
comparable restaurant sales
Q2 11 and Q2
10, company-owned, reported brands and franchise;
percentage
|
|
|
Oct
|
Nov
|
Dec
|
Q2
11
|
Q2
10(1)
|
|
Company-Owned
|
(3.6)
|
(7.3)
|
0.0
|
(3.5)
|
(2.9)
|
|
Chili's
|
|
|
|
|
|
|
Comparable
Restaurant Sales
|
(4.3)
|
(9.6)
|
(0.8)
|
(4.9)
|
(3.2)
|
|
Pricing
Impact
|
1.2
|
1.1
|
1.1
|
1.0
|
1.2
|
|
Mix-Shift
|
0.6
|
1.5
|
1.2
|
1.2
|
(1.3)
|
|
Traffic
|
(6.1)
|
(12.2)
|
(3.1)
|
(7.1)
|
(3.1)
|
|
Maggiano's
|
|
|
|
|
|
|
Comparable
Restaurant Sales
|
1.6
|
9.2
|
4.2
|
4.7
|
(1.6)
|
|
Pricing
Impact
|
0.3
|
1.1
|
1.5
|
1.0
|
0.5
|
|
Mix-Shift
|
(1.8)
|
0.7
|
(4.0)
|
(2.0)
|
(2.2)
|
|
Traffic
|
3.1
|
7.4
|
6.7
|
5.7
|
0.1
|
|
|
|
|
|
|
|
|
Franchise(2)
|
|
|
|
(4.1)
|
(4.8)
|
|
Domestic Comparable
Restaurant Sales
|
|
|
|
(6.5)
|
(4.8)
|
|
International
Comparable Restaurant Sales
|
|
|
|
2.9
|
(4.6)
|
|
|
|
|
|
|
|
|
System-wide(3)
|
|
|
|
(3.7)
|
(3.6)
|
|
(1) Brinker International
comparable restaurant sales for prior year exclude the impact of
discontinued operations.
(2) Although franchise
comparable sales are not 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, advertising fees and rental
payments based on franchisee sales, where applicable.
(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 franchisee operated restaurants.
|
|
|
|
|
|
|
|
The Company's fiscal 2010 consisted of 53 weeks compared to 52
weeks for fiscal 2011. The comparable restaurant sales
percentages above have not been adjusted to reflect the one week
calendar shift. Considering this shift, company-owned
comparable restaurant sales were (3.7), (4.9) and (4.1) percent for
October, November and December, respectively, resulting in (4.1)
percent for the quarter. Management believes the adjusted
presentation is a useful gauge of the company's performance (see
adjusted comparable restaurant sales at Table 3).
Quarterly Operating Performance
CHILI'S second quarter revenues of $548.3
million represent a 7.4 percent decrease from the prior year
period driven by a 4.9 percent decline in comparable restaurant
sales. Revenues were also impacted by a net decline in
capacity of 3.1 percent due to the sale of 21 restaurants to a
franchisee in December 2009 and ten
restaurant closures since the second quarter of fiscal 2010.
Restaurant operating margin increased compared to the prior
year due to favorable cost of sales driven by the positive impact
of changes to value offerings and decreased commodity prices for
chicken, ribs and cheese. Additionally, restaurant labor was
positively impacted by the implementation of Team Service,
partially offset by sales deleverage and higher restaurant
management compensation.
MAGGIANO'S second quarter revenues were $107.8 million and comparable restaurant sales
increased 4.7 percent primarily driven by improved traffic.
Comparable restaurant sales have increased for four
consecutive quarters and traffic has increased for five consecutive
quarters. Restaurant operating margin increased compared to
prior year primarily due to improved cost of sales resulting from
menu changes and sales leverage.
ROYALTY AND FRANCHISE revenues totaled $15.8 million for the quarter, a decrease of 4.3
percent over the prior year driven in part by the recognition of
franchise and development fees associated with the sale of 21
restaurants to a franchisee in the prior year quarter.
International franchise comparable restaurant sales increased
2.9 percent while domestic franchise comparable restaurant sales
decreased 6.5 percent for the same period. Since the second
quarter of fiscal 2010, international and domestic franchisees have
had net openings of 15 and five restaurants, respectively.
Royalty revenues are recognized based on the sales generated
and reported to the company by its franchisees. Brinker
franchisees generated $372.5 million
in sales for the second quarter of fiscal 2011, an increase of 1.3
percent over the prior year.
Other
General and administrative expense decreased $1.0 million for the quarter primarily due to
decreased salary expense from lower headcount.
The effective income tax rate increased to 17.5 percent in the
current quarter as compared to 16.8 percent in the same quarter
last year primarily due to an increase in earnings, partially
offset by the resolution of certain tax positions resulting in a
positive impact in the current quarter. Excluding the impact
of special items, the effective income tax rate from continuing
operations increased to 27.3 percent in the current quarter from
27.1 percent in the same quarter last year driven primarily by
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
income from continuing operations before special
items
Q2 11 and Q2 10; $ millions and
$ per diluted share after-tax
|
|
|
Q2
11
|
EPS
Q2
11
|
Q2
10
|
EPS
Q2
10
|
|
Income from Continuing
Operations
|
37.5
|
0.41
|
14.8
|
0.14
|
|
Other (Gains) and
Charges
|
1.7
|
0.02
|
11.3
|
0.11
|
|
Adjustment for Tax
Items
|
(4.1)
|
(0.05)
|
-
|
-
|
|
Income from Continuing
Operations before
Special Items
|
35.1
|
0.38
|
26.1
|
0.25
|
|
|
|
|
|
|
"The solid EPS growth delivered again this quarter shows the
power of working on the middle of the P&L to improve our
business model. Initiatives like Team Service are improving
the guest experience as well as generating significant savings for
the company. This financial flexibility enables us to invest in
ways that attract and delight our guests, all with the goal of
delivering increased value to our shareholders," said Guy Constant, Executive Vice President and Chief
Financial Officer.
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.
CST today (Jan. 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 website until the end of the day Feb. 22, 2011.
Additional financial information, including statements of income
which detail continuing 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 second quarter fiscal 2011 filing on or
before Feb. 7, 2011; and
- Third quarter earnings release, before market opens,
April 27, 2011.
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 1,559 restaurants under the names
Chili's® Grill & Bar (1,514 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.
(1) Restaurant operating margin is defined as Revenues less Cost
of sales, Restaurant labor and Restaurant expenses.
Contacts:
|
Stacey
Sullivan, Media Relations
|
Marie Perry, Investor
Relations
|
|
|
(800) 775-7290
|
(972) 770-1276
|
|
|
|
|
BRINKER
INTERNATIONAL, INC.
|
|
CONSOLIDATED
STATEMENTS OF INCOME
|
|
(In
thousands, except per share amounts)
|
|
(Unaudited)
|
|
|
|
|
Thirteen Week Periods
Ended
|
Twenty-Six Week Periods
Ended
|
|
|
Dec. 29,
|
Dec. 23,
|
Dec. 29,
|
Dec. 23,
|
|
|
2010
|
2009
|
2010
|
2009
|
|
|
|
|
|
|
|
Revenues
|
$ 671,886
|
$ 705,515
|
$1,326,779
|
$ 1,402,058
|
|
Operating Costs and
Expenses:
|
|
|
|
|
|
Cost of sales
|
179,298
|
207,336
|
353,778
|
407,210
|
|
Restaurant labor
(a)
|
213,465
|
227,719
|
430,611
|
458,968
|
|
Restaurant
expenses
|
162,050
|
162,403
|
327,199
|
336,469
|
|
Depreciation and
amortization
|
32,452
|
34,512
|
65,025
|
69,665
|
|
General and
administrative
|
31,387
|
32,368
|
61,431
|
67,456
|
|
Other gains and charges
(b)
|
2,774
|
18,042
|
5,894
|
20,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and
expenses
|
621,426
|
682,380
|
1,243,938
|
1,360,719
|
|
|
|
|
|
|
|
Operating
income
|
50,460
|
23,135
|
82,841
|
41,339
|
|
|
|
|
|
|
|
Interest
expense
|
7,034
|
6,812
|
14,230
|
13,760
|
|
Other, net
|
(2,000)
|
(1,504)
|
(3,734)
|
(3,659)
|
|
|
|
|
|
|
|
Income before provision
for income taxes
|
45,426
|
17,827
|
72,345
|
31,238
|
|
|
|
|
|
|
|
Provision for income
taxes
|
7,962
|
2,990
|
13,450
|
6,122
|
|
|
|
|
|
|
|
Income from continuing
operations
|
37,464
|
14,837
|
58,895
|
25,116
|
|
|
|
|
|
|
|
Income from discontinued
operations, net of taxes
|
-
|
3,487
|
-
|
8,975
|
|
|
|
|
|
|
|
Net Income
|
$
37,464
|
$
18,324
|
$
58,895
|
$
34,091
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share:
|
|
|
|
|
|
Income from continuing
operations
|
$
0.41
|
$
0.14
|
$ 0
.61
|
$
0.25
|
|
Income from discontinued
operations
|
$
-
|
$
0.04
|
$
-
|
$
0.08
|
|
Net income per
share
|
$
0.41
|
$
0.18
|
$
0.61
|
$
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share:
|
|
|
|
|
|
Income from continuing
operations
|
$
0.41
|
$
0.14
|
$ 0
.61
|
$
0.24
|
|
Income from discontinued
operations
|
$
-
|
$
0.04
|
$
-
|
$
0.09
|
|
Net income per
share
|
$
0.41
|
$
0.18
|
$
0.61
|
$
0.33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average
shares outstanding
|
90,936
|
102,481
|
95,815
|
102,362
|
|
|
|
|
|
|
|
Diluted weighted average
shares outstanding
|
92,111
|
102,994
|
96,847
|
103,005
|
|
|
|
|
|
|
|
(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) Current year Other
gains and charges primarily includes long-lived asset impairments
of $1.7 million related to the closure and impairment of certain
underperforming restaurants and $0.9 million of severance costs.
In the first quarter of fiscal 2011, Other gains and charges
primarily includes $2.8 million of severance costs. Prior
year Other gains and charges primarily includes long-lived asset
impairments of $20.7 million related to the closure and impairment
of certain underperforming restaurants, partially offset by
a $2.8 million gain on the sale of
21 restaurants to a franchisee. In the first quarter of
fiscal 2010, Other gains and charges primarily includes lease
termination charges of $2.2 million.
|
|
|
|
|
|
|
BRINKER
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
Dec.
29,
|
June
30,
|
|
|
|
2010
|
2010
|
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
assets
|
|
$
325,557
|
$
501,067
|
|
Net property and
equipment (a)
|
|
1,084,768
|
1,129,077
|
|
Total other
assets
|
|
202,012
|
221,960
|
|
Total
assets
|
|
$
1,612,337
|
$
1,852,104
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current installments
of long-term debt
|
|
$
21,976
|
$
16,866
|
|
Current
liabilities
|
|
410,920
|
433,011
|
|
Long-term debt, less
current installments
|
|
513,544
|
524,511
|
|
Other
liabilities
|
|
138,340
|
148,968
|
|
Total shareholders'
equity
|
|
527,557
|
728,748
|
|
Total liabilities
and shareholders' equity
|
|
$
1,612,337
|
$
1,852,104
|
|
|
|
|
|
|
(a) At Dec. 29, 2010, the
company owned the land and buildings for 189 of the 869
company-owned restaurants. The net book values of the land
and buildings associated with these restaurants totaled $142.8
million and $138.0 million, respectively.
|
|
|
|
|
|
BRINKER
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(In
thousands)
|
|
|
Twenty-Six
Week Periods Ended
|
|
|
|
|
|
|
Dec. 29,
|
Dec. 23,
|
|
|
2010
|
2009
|
|
Cash Flows From Operating
Activities:
|
|
|
|
Net
income
|
$ 58,895
|
$ 34,091
|
|
Income from discontinued operations, net of
taxes
|
-
|
(8,974)
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
65,025
|
69,665
|
|
Restructure charges and
other impairments
|
4,129
|
24,146
|
|
Changes in assets and
liabilities
|
(58,044)
|
19,091
|
|
Net cash provided by
operating activities of continuing operations
|
70,005
|
138,019
|
|
|
|
|
|
Cash Flows from Investing
Activities:
|
|
|
|
Payments for property and
equipment
|
(31,842)
|
(21,307)
|
|
Proceeds from sale of
assets
|
6,873
|
19,568
|
|
Investment in equity
method investee
|
(1,556)
|
-
|
|
Decrease in restricted
cash
|
-
|
29,749
|
|
Net cash provided by (used
in) investing activities of continuing operations
|
(26,525)
|
28,010
|
|
|
|
|
|
Cash Flows from Financing
Activities:
|
|
|
|
Purchases of treasury
stock
|
(251,818)
|
(2,841)
|
|
Payments of
dividends
|
(28,562)
|
(23,161)
|
|
Proceeds from issuances of
treasury stock
|
12,165
|
469
|
|
Payments on long-term
debt
|
(5,564)
|
(140,544)
|
|
Excess tax benefits from
stock-based compensation
|
140
|
129
|
|
Net cash used in financing
activities of continuing operations
|
(273,639)
|
(165,948)
|
|
|
|
|
|
Cash Flows from
Discontinued Operations:
|
|
|
|
Net cash
provided by operating activities
|
-
|
18,421
|
|
Net cash
used in investing activities
|
-
|
(2,347)
|
|
Net cash provided by
discontinued operations
|
-
|
16,074
|
|
|
|
|
|
Net change in cash and
cash equivalents
|
(230,159)
|
16,155
|
|
Cash and cash equivalents
at beginning of period
|
344,624
|
94,156
|
|
Cash and cash equivalents
at end of period
|
$
114,465
|
$
110,311
|
|
|
|
|
BRINKER
INTERNATIONAL, INC.
|
|
RESTAURANT
SUMMARY
|
|
|
|
|
|
|
|
Second
Quarter
Net
Openings/(Closings)
|
Total
Restaurants
|
Projected
Openings
|
|
|
Fiscal
2011
|
Dec. 29,
2010
|
Fiscal
2011
|
|
|
|
|
|
|
Company-Owned
Restaurants:
|
|
|
|
|
Chili's
|
(2)
|
825
|
-
|
|
Maggiano's
|
-
|
44
|
-
|
|
|
(2)
|
869
|
-
|
|
|
|
|
|
|
Franchise
Restaurants:
|
|
|
|
|
Chili's
|
2
|
470
|
10-13
|
|
International(a)
|
4
|
220
|
35-40
|
|
|
6
|
690
|
45-53
|
|
|
|
|
|
|
Total
Restaurants:
|
|
|
|
|
Chili's
|
-
|
1,295
|
10-13
|
|
Maggiano's
|
-
|
44
|
-
|
|
International
|
4
|
220
|
35-40
|
|
|
4
|
1,559
|
45-53
|
|
|
|
|
|
|
(a) At Dec. 29, 2010,
international franchise restaurants by brand were 219 Chili's and
one Maggiano's.
|
|
|
|
|
|
Table 3: Q2
comparable restaurant sales adjusted for
53rd
week
Q2 11,
company-owned and reported brands; percentage
|
|
|
Oct
|
Nov
|
Dec
|
Q2
11
|
|
Company-Owned
|
|
|
|
|
|
Comparable Restaurant
Sales
|
(3.6)
|
(7.3)
|
0.0
|
(3.5)
|
|
Adjustment for
53rd week
|
(0.1)
|
2.4
|
(4.1)
|
(0.6)
|
|
Adjusted Comparable
Restaurant Sales
|
(3.7)
|
(4.9)
|
(4.1)
|
(4.1)
|
|
|
|
|
|
|
|
Chili's
|
|
|
|
|
|
Comparable Restaurant
Sales
|
(4.3)
|
(9.6)
|
(0.8)
|
(4.9)
|
|
Adjustment for
53rd week
|
(0.4)
|
4.0
|
(5.0)
|
(0.5)
|
|
Adjusted Comparable
Restaurant Sales
|
(4.7)
|
(5.6)
|
(5.8)
|
(5.4)
|
|
|
|
|
|
|
|
Maggiano's
|
|
|
|
|
|
Comparable Restaurant
Sales
|
1.6
|
9.2
|
4.2
|
4.7
|
|
Adjustment for
53rd week
|
1.3
|
(5.0)
|
0.0
|
(1.0)
|
|
Adjusted Comparable
Restaurant Sales
|
2.9
|
4.2
|
4.2
|
3.7
|
|
|
|
|
|
|
SOURCE Brinker International, Inc.