DALLAS, Jan. 24, 2012 /PRNewswire/ -- Brinker
International, Inc. (NYSE: EAT) today announced results for the
fiscal second quarter ended Dec. 28,
2011.
Highlights for the second quarter of fiscal 2012 include the
following:
- Earnings per diluted share, before special items, increased
23.7 percent to $0.47 compared to
$0.38 for the second quarter of
fiscal 2011 (see non-GAAP reconciliation below)
- On a GAAP basis, earnings per diluted share increased 7.3
percent to $0.44 from $0.41 in the second quarter of the prior
year
- Total revenues increased 1.5 percent to $681.9 million
- Restaurant operating margin(1) improved 50 basis points to 17.9
percent compared to the second quarter of fiscal 2011
- Chili's comparable restaurant sales increased 1.4 percent and
customer traffic increased 1.1 percent, the third consecutive
quarterly increase for both metrics
- Maggiano's comparable restaurant sales increased 2.8 percent,
representing the eighth consecutive quarterly increase, and
customer traffic increased by 0.6 percent, representing the ninth
consecutive quarterly increase
- The company repurchased approximately 2.0 million shares of its
common stock for $47.8 million in the
second quarter
- The company paid a dividend of 16
cents per share in the second quarter, an increase of 14.3
percent over the prior year quarter
- For the first six months of fiscal 2012, cash flows provided by
operating activities were $114.2
million and capital expenditures totaled $53.5 million
"Brinker delivered another strong quarter as evidenced by a 24
percent increase in our EPS. This marked Brinker's fourth
consecutive quarter of comp sales and traffic growth, which
demonstrates the effectiveness of our strategies, the strength of
our team and the receptivity of our guests to the changes we're
making to our business," said Doug
Brooks, President and Chief Executive Officer. "We are
confident we'll deliver on our promise to double EPS by
2015."
Table
1: Monthly and Q2 comparable restaurant sales
|
Q2 12
and Q2 11, company-owned, reported brands and franchise;
percentage
|
|
|
|
|
|
|
|
Oct
|
Nov
|
Dec
|
Q2
12
|
Q2
11
|
Brinker
International
|
1.4
|
1.4
|
2.1
|
1.7
|
(3.5)
|
Chili's Company-Owned
|
|
|
|
|
|
Comparable Restaurant
Sales
|
1.4
|
1.4
|
1.5
|
1.4
|
(4.9)
|
Pricing Impact
|
1.0
|
1.0
|
1.1
|
1.1
|
1.0
|
Mix-Shift
|
(0.5)
|
(0.5)
|
(1.3)
|
(0.8)
|
1.2
|
Traffic
|
0.9
|
0.9
|
1.7
|
1.1
|
(7.1)
|
Maggiano's
|
|
|
|
|
|
Comparable Restaurant
Sales
|
1.6
|
1.4
|
4.8
|
2.8
|
4.7
|
Pricing Impact
|
2.1
|
1.9
|
1.5
|
1.8
|
1.0
|
Mix-Shift
|
(0.4)
|
0.0
|
1.3
|
0.4
|
(2.0)
|
Traffic
|
(0.1)
|
(0.5)
|
2.0
|
0.6
|
5.7
|
|
|
|
|
|
|
Franchise(1)
|
|
|
|
2.6
|
(4.1)
|
Domestic Comparable Restaurant Sales
|
|
|
|
1.7
|
(6.5)
|
International Comparable Restaurant Sales
|
|
|
|
4.8
|
2.9
|
|
|
|
|
|
|
System-wide(2)
|
|
|
|
2.0
|
(3.7)
|
(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 second quarter revenues of $554.8
million represent a 1.2 percent increase from $548.3 million in the prior year period driven by
increased guest traffic and menu prices. Chili's operating margin
improved compared to the prior year primarily due to successful
labor savings initiatives related to food preparation procedures.
Restaurant expense was also positively impacted by lower repair and
maintenance expense, credit card fees, workers' compensation
insurance expenses and sales leverage on fixed costs related to
higher revenue. Cost of sales was negatively impacted by
unfavorable pricing on oils, beef, produce and dairy, partially
offset by favorable pricing on poultry.
MAGGIANO'S second quarter revenues of $110.9 million increased 2.9 percent primarily
driven by increased menu prices and improved traffic. Restaurant
operating margin improved compared to prior year primarily due to
lower workers' compensation insurance expense, credit card fees and
sales leverage on fixed costs related to higher revenue.
ROYALTY AND FRANCHISE revenues totaled $16.2 million for the quarter, an increase of 2.5
percent over the prior year driven primarily by 22 international
net openings since the second quarter of fiscal 2011. International
comparable restaurant sales increased 4.8 percent while domestic
franchise comparable restaurant sales increased 1.7 percent.
Brinker franchisees generated $389
million in sales(2) for the second quarter of fiscal 2012,
an increase of 4.5 percent over the prior year.
"We're pleased with the progress we made during the second
quarter on our journey toward a 400 basis-point margin improvement
in our business," said Guy Constant,
Executive Vice President and Chief Financial Officer. "Our solid
results and significant progress on what is a challenging strategic
plan gives us confidence we will continue to increase shareholder
value."
Other
General and administrative expense remained flat for the quarter
primarily due to a decrease in performance based compensation,
offset by the impact of the expiration of the transition services
agreements with Macaroni Grill and On The Border.
Interest expense decreased $0.5
million for the quarter primarily due to lower interest
rates.
Excluding the impact of special items, the effective income tax
rate increased to 29.7 percent in the current quarter from 27.3
percent in the same quarter last year driven by increased earnings.
On a GAAP basis, the effective income tax rate increased to 29.0
percent in the current quarter as compared to 17.5 percent in the
same quarter last year primarily due to the positive impact of
resolved tax positions in the prior year and 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 before special items
|
Q2 12
and Q2 11; $ millions and $ per diluted share
after-tax
|
|
|
|
EPS
|
|
EPS
|
|
Q2 12
|
Q2 12
|
Q2 11
|
Q2
11
|
Net
Income
|
35.7
|
0.44
|
37.5
|
0.41
|
Other (Gains) and Charges(1)
|
2.5
|
0.03
|
1.7
|
0.02
|
Adjustment for Tax Items
|
-
|
-
|
(4.1)
|
(0.05)
|
Net Income
before Special Items
|
38.2
|
0.47
|
35.1
|
0.38
|
|
|
|
|
|
(1)
Pre-tax Other gains and charges was $4.0 million and $2.8 million
in the second quarter of fiscal 2012 and 2011, 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 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 8 a.m.
CST today (Jan. 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 Feb. 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 second quarter fiscal 2012 filing on or
before Feb. 6, 2012; and
- Third quarter earnings release, before market opens,
April 23, 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
|
Twenty-Six Week Periods Ended
|
|
Dec. 28,
|
Dec. 29,
|
Dec. 28,
|
Dec. 29,
|
|
2011
|
2010
|
2011
|
2010
|
|
|
|
|
|
Revenues
|
$
681,904
|
$
671,886
|
$1,350,306
|
$
1,326,779
|
Operating Costs and Expenses:
|
|
|
|
|
Cost of sales
|
185,189
|
179,298
|
366,807
|
353,778
|
Restaurant labor (a)
|
214,317
|
213,465
|
430,262
|
430,611
|
Restaurant expenses
|
160,077
|
162,050
|
325,642
|
327,199
|
Depreciation and amortization
|
31,153
|
32,452
|
62,336
|
65,025
|
General and administrative
|
31,215
|
31,387
|
64,034
|
61,431
|
Other gains and charges (b)
|
4,033
|
2,774
|
5,718
|
5,894
|
|
|
|
|
|
|
|
|
|
|
Total operating costs and expenses
|
625,984
|
621,426
|
1,254,799
|
1,243,938
|
|
|
|
|
|
Operating income
|
55,920
|
50,460
|
95,507
|
82,841
|
|
|
|
|
|
Interest expense
|
6,509
|
7,034
|
13,557
|
14,230
|
Other, net
|
(854)
|
(2,000)
|
(1,946)
|
(3,734)
|
|
|
|
|
|
Income before provision for income taxes
|
50,265
|
45,426
|
83,896
|
72,345
|
|
|
|
|
|
Provision for income taxes
|
14,591
|
7,962
|
24,601
|
13,450
|
|
|
|
|
|
Net
Income
|
$ 35,674
|
$ 37,464
|
$ 59,295
|
$ 58,895
|
|
|
|
|
|
|
|
|
|
|
Basic net income per
share
|
$ 0.45
|
$ 0.41
|
$ 0 .73
|
$ 0.61
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per
share
|
$ 0.44
|
$ 0.41
|
$ 0 .72
|
$ 0.61
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average shares outstanding
|
79,840
|
90,936
|
80,792
|
95,815
|
|
|
|
|
|
Diluted weighted average shares
outstanding
|
81,655
|
92,111
|
82,619
|
96,847
|
|
|
|
|
|
(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 second quarter of fiscal 2012,
Other gains and charges includes long-lived asset impairments of
$1.5 million related to the closure and impairment of certain
underperforming restaurants and lease termination charges of $1.9
million. In the first quarter of fiscal 2012, Other gains and
charges includes litigation charges of $2.5 million and lease
termination charges of $0.5 million, partially offset by a $1.3
million gain related to the sale of land. In the second quarter of
fiscal 2011, Other gains and charges primarily includes long-lived
asset impairments of $1.7 million related to restaurant closures
and impairments 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.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(In
thousands)
|
|
|
|
|
|
|
Dec.
28,
|
June
29,
|
|
|
2011
|
2011
|
|
|
(Unaudited)
|
|
ASSETS
|
|
|
|
Current assets
|
|
$
252,742
|
$
221,360
|
Net property and equipment (a)
|
|
1,038,698
|
1,056,279
|
Total other assets
|
|
196,770
|
206,929
|
Total assets
|
|
$ 1,488,210
|
$ 1,484,568
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
Current installments of long-term
debt
|
|
$
27,211
|
$
22,091
|
Current liabilities
|
|
394,938
|
383,510
|
Long-term debt, less current
installments
|
|
561,482
|
502,572
|
Other liabilities
|
|
135,884
|
137,485
|
Total shareholders' equity
|
|
368,695
|
438,910
|
Total liabilities and shareholders'
equity
|
|
$ 1,488,210
|
$ 1,484,568
|
|
|
|
|
(a) At Dec. 28, 2011, 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 $141.8 million and $128.0
million, respectively.
|
BRINKER
INTERNATIONAL, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(In
thousands)
|
|
|
|
|
Dec. 28,
|
Dec.
29,
|
|
2011
|
2010
|
Cash Flows From Operating Activities:
|
|
|
Net income
|
$
59,295
|
$
58,895
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
Depreciation and amortization
|
62,336
|
65,025
|
Restructure charges and other impairments
|
4,898
|
4,129
|
Stock-based compensation
|
6,449
|
6,455
|
Net loss (gain) on disposal of assets
|
573
|
(1,468)
|
Changes in assets and liabilities
|
(19,306)
|
(63,031)
|
Net cash provided by operating activities
|
114,245
|
70,005
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
Payments for property and equipment
|
(53,475)
|
(31,842)
|
Proceeds from sale of assets
|
4,279
|
6,873
|
Investment in equity method investees
|
(912)
|
(1,556)
|
Net cash used in investing activities
|
(50,108)
|
(26,525)
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
Purchases of treasury
stock
|
(125,638)
|
(251,818)
|
Proceeds from issuance of long-term debt
|
70,000
|
-
|
Payments of dividends
|
(25,073)
|
(28,562)
|
Proceeds from issuances of treasury stock
|
16,649
|
12,165
|
Payments on long-term debt
|
(5,625)
|
(5,564)
|
Payments for deferred financing costs
|
(1,620)
|
-
|
Excess tax benefits from stock-based
compensation
|
792
|
140
|
Net cash used in financing activities
|
(70,515)
|
(273,639)
|
|
|
|
Net change in cash and cash
equivalents
|
(6,378)
|
(230,159)
|
Cash and cash equivalents at beginning of
period
|
81,988
|
344,624
|
Cash and cash equivalents at end of
period
|
$ 75,610
|
$ 114,465
|
BRINKER
INTERNATIONAL, INC.
|
RESTAURANT SUMMARY
|
|
|
|
|
|
Second
Quarter
Net
Openings/(Closings)
|
Total
Restaurants
|
Projected
Openings
|
|
Fiscal
2012
|
Dec. 28,
2011
|
Fiscal
2012
|
|
|
|
|
Company-Owned
Restaurants:
|
|
|
|
Chili's
|
(2)
|
821
|
-
|
Maggiano's
|
-
|
44
|
-
|
|
(2)
|
865
|
-
|
|
|
|
|
Franchise
Restaurants:
|
|
|
|
Chili's
|
(3)
|
467
|
3
|
International (a)
|
1
|
242
|
37-42
|
|
(2)
|
709
|
40-45
|
|
|
|
|
Total Restaurants:
|
|
|
|
Chili's
|
(5)
|
1,288
|
3
|
Maggiano's
|
-
|
44
|
-
|
International (a)
|
1
|
242
|
37-42
|
|
(4)
|
1,574
|
40-45
|
|
|
|
|
(a) At Dec. 28, 2011,
international franchise restaurants by brand were 241 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.