DALLAS, April 29, 2020 /PRNewswire/ -- Brinker
International, Inc. (NYSE: EAT) today announced a business update
related to the novel strain of coronavirus ("COVID-19"), in
addition to results for the third quarter of fiscal 2020 ended
March 25, 2020.
Brinker began experiencing the impact of the COVID-19 pandemic
on March 8, 2020 resulting in
decreased traffic and the closure of all of our dining rooms as we
transitioned to a 100% off-premise model by the end of the third
quarter. We have adapted our existing to-go and delivery sales
channels in order to deliver a safe and quality experience for team
members and guests during this pandemic. Our strategic decision to
enhance our off-premise business over the last few years including
online ordering, mobile app, curbside service and third-party
delivery, has enabled us to conveniently serve a significantly
higher volume of off-premise guests during this pandemic.
"Before the crisis hit, Brinker's strategies were working
extremely well and the third quarter was shaping up to be very
strong," said Wyman Roberts, CEO.
"Since COVID-19, we have focused on the safety and health of our
team members and guests while shifting to a to-go and delivery only
model. We have supported our team members with a relief fund of
more than $15 million, and worked
hard to keep as many employees as possible. Our absolute and
relative sales growth is a testament to the strength of the
strategies we have been working on the past few years and will
ensure our continued strength post COVID-19."
In the third quarter of fiscal 2020, through March 8, 2020,
our multi-year strategies were delivering comparable restaurant
sales growth. Company-owned Chili's comparable restaurant sales had
increased by 3.3%, and Company-owned Maggiano's comparable
restaurant sales had increased by 0.6%. Our Chili's off-premise
sales, which includes both to-go and delivery, also grew reaching
approximately 20% of sales, with approximately 14% coming from
to-go and 6% from delivery. While the spread of COVID-19
dramatically changed the full-quarter results, we believe these
intra-quarter results are further evidence and provide a good
foundation for our brands as they move forward our multi-year
strategies.
As Chili's and Maggiano's operate in an off-premise only model,
below are some current preliminary results related to Company-owned
restaurants for the weeks subsequent to the third quarter of fiscal
2020:
- Off-premise sales have grown each week since the COVID-19
pandemic, and have captured 57% of prior year Company total
restaurant sales during the week ended April
22, 2020, adjusted to exclude the Midwest region acquisition
that occurred in the first quarter of fiscal 2020
- Online ordering at Chili's accounted for approximately 70% of
all off-premise orders from March 26,
2020 to April 22, 2020
- Delivery sales are approximately 20% of total sales from
March 26, 2020 to April 22, 2020
- Total restaurant sales represent the total sales dollars per
week of Company-owned restaurants, including the Midwest region
restaurants, as well as the percentage change from the prior week
from April 1, 2020 to April 22, 2020:
|
Total Restaurant
Sales
|
|
|
|
Week
Ending
|
|
Percent Change
from Prior Week
|
|
4/1/2020
|
|
4/8/2020
|
|
4/15/2020
|
|
4/22/2020
|
|
4/1/2020
|
|
4/8/2020
|
|
4/15/2020
|
|
4/22/2020
|
Company-owned
|
$
|
23.9
|
|
|
$
|
26.2
|
|
|
$
|
30.9
|
|
|
$
|
34.3
|
|
|
12.7
|
%
|
|
9.6
|
%
|
|
17.9
|
%
|
|
11.0
|
%
|
Chili's
|
22.2
|
|
|
24.3
|
|
|
28.3
|
|
|
32.2
|
|
|
13.3
|
%
|
|
9.5
|
%
|
|
16.5
|
%
|
|
13.8
|
%
|
Maggiano's
|
1.7
|
|
|
1.9
|
|
|
2.6
|
|
|
2.1
|
|
|
6.3
|
%
|
|
11.8
|
%
|
|
36.8
|
%
|
|
(19.2)
|
%
|
- Comparable restaurant sales represents the percentage change in
Company-owned comparable restaurant sales for weekly results from
April 1, 2020 to present:
|
Comparable
Restaurant Sales
|
|
Fiscal 20 vs
Fiscal 19
|
|
Week
Ending
|
|
4/1/2020
|
|
4/8/2020
|
|
4/15/2020
|
|
4/22/2020
|
Company-owned
|
(64.6)
|
%
|
|
(59.7)
|
%
|
|
(53.1)
|
%
|
|
(46.8)
|
%
|
Chili's
|
(62.9)
|
%
|
|
(57.8)
|
%
|
|
(51.6)
|
%
|
|
(42.5)
|
%
|
Maggiano's
|
(77.0)
|
%
|
|
(73.7)
|
%
|
|
(64.6)
|
%
|
|
(73.7)
|
%
|
As of April 24, 2020, we have total liquidity of
$175 million, comprised of total cash
and revolver availability. Given the current sales levels and
reductions in expenses, we estimate an average cash burn level of
approximately $5 million per week
while our business is primarily operating as off-premise. As a
precautionary measure, we continue to evaluate additional sources
of capital as we navigate through this evolving situation, and the
Company is filing an automatic shelf registration statement on Form
S-3ASR to provide the Company with flexibility to access the public
capital markets in order to respond to future financing and
business opportunities if and when the Company deems
appropriate.
We do not have any further updates on our fiscal 2020 withdrawn
guidance as discussed in our April 2,
2020 press release.
THIRD QUARTER OF FISCAL 2020 RESULTS
Highlights include the following:
- Earnings per diluted share, on a GAAP basis, in the third
quarter of fiscal 2020 decreased 38.2% to $0.81 compared to $1.31 in the third quarter of fiscal 2019
primarily due to reduced traffic and incremental expenses for
employee assistance payments made in connection with the COVID-19
pandemic, partially offset by the impact of reduced
performance-based compensation expenses
- Earnings per diluted share, excluding special items, in the
third quarter of fiscal 2020 increased 1.6% to $1.28 compared to $1.26 in the third quarter of fiscal 2019
primarily due to reduced performance-based compensation expenses
and income taxes partially offset by the traffic decline resulting
from the COVID-19 pandemic (see non-GAAP reconciliation below)
- Operating income, as a percentage of Total revenues, was 4.8%
in the third quarter of fiscal 2020 compared to 8.4% in the third
quarter of fiscal 2019 primarily due to reduced traffic and
incremental expenses for employee assistance payments made in
connection with the COVID-19 pandemic, partially offset by the
impact of reduced performance-based compensation expenses
- Restaurant operating margin, as a percentage of Company sales,
was 12.8% in the third quarter of fiscal 2020 compared to 14.3% in
the third quarter of fiscal 2019 (see non-GAAP reconciliation
below)
- Brinker International's Company sales in the third quarter of
fiscal 2020 increased 3.5% to $840.4
million compared to the third quarter of fiscal 2019
primarily due to increased capacity from the 116 Chili's
restaurants acquired in the first quarter of fiscal 2020, partially
offset by the traffic decline resulting from the COVID-19 pandemic.
Total revenues in the third quarter of fiscal 2020 increased 2.5%
to $860.0 million compared to
$839.3 million in the third quarter
of fiscal 2019
- Comparable restaurant sales for company-owned and franchise
restaurants experienced significant traffic declines due to the
COVID-19 pandemic in the third quarter of fiscal 2020 compared to
the third quarter of fiscal 2019 as follows:
-
- Chili's company-owned comparable restaurant sales (5.3%)
- Maggiano's company-owned comparable restaurant sales
(9.9%)
- Chili's U.S franchise comparable restaurant sales (6.3%)
- Chili's international franchise comparable restaurant sales
(9.5%)
- Cash flows provided by operating activities in the thirty-nine
week period ended March 25, 2020 were
$237.8 million, and capital
expenditures totaled $82.0 million
resulting in free cash flow of $155.8
million (see non-GAAP reconciliation below)
Quarterly Operating Performance
Company Sales and Company Restaurant Expenses
Chili's Company sales in the third quarter of fiscal 2020
increased 5.5% to $748.7 million from
$709.8 million in the third quarter
of fiscal 2019 primarily due to the acquisition of 116 Chili's
restaurants in the first quarter of fiscal 2020 and increased
off-premise sales as we transitioned to a 100% off-premise model by
the end of the third quarter of fiscal 2020. These increases were
partially offset by decreased net comparable restaurant sales
driven by reduced dining room traffic and 10 temporarily closed
restaurants due to the COVID-19 pandemic.
As compared to the third quarter of fiscal 2019, Chili's
restaurant operating margin(1) decreased. Restaurant
expenses, as a percentage of Company sales, increased compared to
the third quarter of fiscal 2019 primarily due to sales deleverage
as a result of COVID-19 and higher expenses primarily related to
delivery fees in connection with the growth in off-premise sales,
partially offset by lower advertising spend. Restaurant labor, as a
percentage of Company sales, increased compared to the third
quarter of fiscal 2019 primarily due to sales deleverage as a
result of COVID-19 and higher hourly labor wage rates, partially
offset by lower manager bonus expense. Food and beverage costs, as
a percentage of Company sales, increased compared to the third
quarter of fiscal 2019 primarily due to unfavorable commodity
pricing and menu item mix, partially offset by increased menu
pricing.
Maggiano's Company sales in the third quarter of fiscal 2020
decreased to $91.7 million from
$101.8 million in the third quarter
of fiscal 2019 primarily due to a 9.9% decrease in comparable
restaurant sales driven by reduced dining and banquet room traffic
due to the COVID-19 pandemic and also included 0.7% of negative
weather impact. As compared to the third quarter of fiscal 2019,
Maggiano's restaurant operating margin(1) decreased.
Restaurant expenses, as a percentage of Company sales, increased
primarily due to sales deleverage as a result of COVID-19 and
higher rent expenses, partially offset by lower repairs and
maintenance expenses. Restaurant labor, as a percentage of Company
sales, increased primarily due to sales deleverage as a result of
COVID-19 and higher hourly labor wage rates, partially offset by
lower manager bonus expense. Food and beverage costs, as a
percentage of Company sales, decreased primarily due to increase
menu pricing, partially offset by unfavorable menu mix.
(1)
|
Restaurant operating
margin is defined as Company sales less Food and beverage costs,
Restaurant labor and Restaurant expenses and excludes Depreciation
and amortization expenses (see non-GAAP reconciliation
below).
|
Franchise and Other Revenues
Franchise and other revenues in the third quarter of fiscal 2020
decreased 29.2% to $19.6 million from
$27.7 million in the third quarter of
fiscal 2019 primarily due to a decrease in royalties and franchise
marketing contributions that are primarily due to the acquisition
of 116 Chili's restaurants from a franchisee in the first quarter
of fiscal 2020 and the adverse impact of the COVID-19 pandemic on
our domestic and global franchise restaurants. In the third quarter
of fiscal 2020, our franchisees generated approximately
$218.0 million in
sales(2).
(2)
|
Royalty revenues are
recognized based on the sales generated and reported to the Company
by franchisees.
|
General and Administrative Expenses
General and administrative expenses in the third
quarter of fiscal 2020 decreased 42.9% to $23.3 million from $40.8
million in the third quarter of fiscal 2019 primarily due to
reduced performance-based incentive compensation expenses as the
COVID-19 pandemic has negatively impacted business performance
metrics. Additionally, stock-based compensation declined primarily
related to the acceleration of stock-based compensation expenses in
the first quarter of fiscal 2020 for retirement eligible executives
and the timing of grants. Retirement eligibility results in the
compensation being recognized in full upon grant as there is no
vesting period.
Income Taxes
On a GAAP basis, the effective income tax rate in the third
quarter of fiscal 2020 decreased to a benefit of (13.2%) compared
to 10.3% in the third quarter of fiscal 2019 primarily driven by
reduced profitability related to the COVID-19 pandemic in the third
quarter of fiscal 2020, and the FICA tax credit in fiscal 2020. The
provision for income taxes includes a significant reduction in the
third quarter of fiscal 2020 necessary to align the year-to-date
provision for income taxes to the year-to-date income. Excluding
the impact of special items (see non-GAAP reconciliation below for
details), the effective income rate was 4.6% in the third quarter
of fiscal 2020.
Comparable Restaurant Sales
The table below presents the percentage change in company-owned
and franchise comparable restaurant sales in the quarter
comparative periods as described below:
|
Comparable
Restaurant
Sales(1)
|
|
Price
Impact
|
|
Mix-Shift(2)
|
|
Traffic
|
|
Q3: 20 vs
19
|
|
Q3: 19 vs
18
|
|
Q3: 20 vs
19
|
|
Q3: 19 vs
18
|
|
Q3: 20 vs
19
|
|
Q3: 19 vs
18
|
|
Q3: 20 vs
19
|
|
Q3: 19 vs
18
|
Company-owned
|
(5.9)
|
%
|
|
2.6
|
%
|
|
1.0
|
%
|
|
1.5
|
%
|
|
(0.1)
|
%
|
|
(1.7)
|
%
|
|
(6.8)
|
%
|
|
2.8
|
%
|
Chili's
|
(5.3)
|
%
|
|
2.9
|
%
|
|
0.9
|
%
|
|
1.6
|
%
|
|
0.3
|
%
|
|
(1.7)
|
%
|
|
(6.5)
|
%
|
|
3.0
|
%
|
Maggiano's
|
(9.9)
|
%
|
|
0.4
|
%
|
|
1.8
|
%
|
|
0.8
|
%
|
|
(1.5)
|
%
|
|
(0.4)
|
%
|
|
(10.2)
|
%
|
|
0.0
|
%
|
Chili's
franchise(3)
|
(7.7)
|
%
|
|
(0.2)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
(6.3)
|
%
|
|
2.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
International
|
(9.5)
|
%
|
|
(3.9)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Chili's
domestic(4)
|
(5.4)
|
%
|
|
2.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
System-wide(5)
|
(6.2)
|
%
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Comparable Restaurant
Sales include all restaurants that have been in operation for more
than 18 months except acquired restaurants which are included after
more than 12 months ownership. Percentage amounts are calculated
based on the comparable periods year-over-year.
|
(2)
|
Mix-Shift is
calculated as the year-over-year percentage change in Company sales
resulting from the change in menu items ordered by
guests.
|
(3)
|
Chili's Franchise
sales generated by franchisees are not included in revenues in the
Consolidated Statements of Comprehensive Income (Unaudited);
however, we generate royalty revenues and advertising fees based on
franchisee revenues, where applicable. We believe including
franchise comparable restaurant sales provides investors
information regarding brand performance that is relevant to current
operations.
|
(4)
|
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.
|
(5)
|
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 Chili's
restaurants.
|
Non-GAAP Measures
Brinker management uses certain non-GAAP measures in analyzing
operating performance and believes that the presentation of these
measures in this release provides investors with information that
is beneficial to gaining an understanding of the Company's
financial results. Non-GAAP disclosures should not be viewed as a
substitute for financial results determined in accordance with
GAAP, nor are they necessarily comparable to non-GAAP performance
measures that may be presented by other companies. Reconciliations
of these non-GAAP measures are included in the tables below.
Reconciliation of Net Income and Net Income Per Share
Excluding Special Items
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. The following reconciliation is
presented in millions, except per diluted share amounts.
|
Q3
20
|
|
EPS Q3
20
|
|
Q3
19
|
|
EPS Q3
19
|
Net income
|
$
|
30.8
|
|
|
$
|
0.81
|
|
|
$
|
49.8
|
|
|
$
|
1.31
|
|
Special
items(1)
|
23.7
|
|
|
0.63
|
|
|
(2.5)
|
|
|
(0.07)
|
|
Income tax effect
related to special items(2)
|
(6.0)
|
|
|
(0.16)
|
|
|
0.6
|
|
|
0.02
|
|
Special items, net of
taxes
|
17.7
|
|
|
0.47
|
|
|
(1.9)
|
|
|
(0.05)
|
|
Adjustment for
special tax items(3)
|
0.0
|
|
|
0.00
|
|
|
0.0
|
|
|
0.00
|
|
Net income excluding
special items
|
$
|
48.5
|
|
|
$
|
1.28
|
|
|
$
|
47.9
|
|
|
$
|
1.26
|
|
|
|
(1)
|
Special items in the
third quarter of fiscal 2020 consist of a charge of $19.3 million
in Other (gains) and charges that included charges related to the
COVID-19 pandemic, and $4.4 million of incremental depreciation
expenses associated with a change in estimated useful life of
certain restaurant-level long-lived assets.
|
|
|
|
Special items in the
third quarter of fiscal 2019 consist of a gain of $3.5 million in
Other (gains) and charges, partially offset by $1.0 million of
incremental depreciation expenses associated with a change in
estimated useful life of certain restaurant-level long-lived
assets.
|
|
|
|
Footnote "(2)" to the
Consolidated Statements of Comprehensive Income (Unaudited)
contains additional details on the composition of Other (gains) and
charges for each period presented.
|
(2)
|
Income tax effect
related to special items is based on the statutory tax rate in
effect at the end of each period presented.
|
(3)
|
Adjustment for
special tax items in the third quarter of fiscal 2020 and fiscal
2019 was negligible.
|
Reconciliation of Restaurant Operating Margin
Restaurant operating margin is not a measurement determined in
accordance with GAAP and should not be considered in isolation, or
as an alternative to operating income as an indicator of financial
performance. Restaurant operating margin is widely regarded in the
restaurant industry as a useful metric by which to evaluate
restaurant-level operating efficiency and performance of ongoing
restaurant-level operations. This non-GAAP measure is not
indicative of overall company performance and profitability because
this measure does not directly accrue benefit to the shareholders
due to the nature of costs excluded. We define Restaurant operating
margin as Company sales less Company restaurant expenses, including
Food and beverage costs, Restaurant labor and Restaurant expenses.
We believe this metric provides a more useful comparison between
periods and enables investors to focus on the performance of
restaurant-level operations by excluding revenues not related to
food and beverage sales at company-owned restaurants, corporate
General and administrative expenses, Depreciation and amortization,
and Other (gains) and charges.
Restaurant operating margin excludes Franchise and other
revenues which are earned primarily from franchise royalties,
advertising fees, and other non-food and beverage revenues streams
such as banquet service charges, digital entertainment revenues and
gift card breakage. Depreciation and amortization expenses,
substantially all of which are related to restaurant-level assets,
are excluded because such expenses represent historical costs which
do not reflect current cash outlays for the restaurants. General
and administrative expenses include primarily non-restaurant-level
costs associated with support of the restaurants and other
activities at our corporate offices and are therefore excluded. We
believe that excluding special items, included within Other (gains)
and charges, from Restaurant operating margin provides investors
with a clearer perspective of the Company's ongoing operating
performance and a more useful comparison to prior period results.
Restaurant operating margin as presented may not be comparable to
other similarly titled measures of other companies in our
industry.
The following reconciliation is presented in millions, except
percentages:
|
Q3
20
|
|
Q3
19
|
Operating income -
GAAP
|
$
|
41.1
|
|
|
$
|
70.2
|
|
Operating income as a
percentage of Total revenues
|
4.8
|
%
|
|
8.4
|
%
|
|
|
|
|
Operating income -
GAAP
|
$
|
41.1
|
|
|
$
|
70.2
|
|
Less: Franchise
and other revenues
|
(19.6)
|
|
|
(27.7)
|
|
Plus:
Depreciation and amortization
|
43.5
|
|
|
36.4
|
|
General and
administrative
|
23.3
|
|
|
40.8
|
|
Other (gains) and
charges
|
19.3
|
|
|
(3.5)
|
|
Restaurant operating
margin - non-GAAP
|
$
|
107.6
|
|
|
$
|
116.2
|
|
Restaurant operating
margin as a percentage of Company sales
|
12.8
|
%
|
|
14.3
|
%
|
Reconciliation of Free Cash Flow
Brinker believes presenting free cash flow provides a useful
measure to evaluate the cash flow available for reinvestment after
considering the capital requirements and expenditures of our
business operations (in millions).
|
Thirty-Nine
Week
Period Ended
March 25, 2020
|
Cash flows provided
by operating activities - GAAP
|
$
|
237.8
|
|
Capital
expenditures
|
(82.0)
|
|
Free cash flow -
non-GAAP
|
$
|
155.8
|
|
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 Brinker's website
today, April 29, 2020 at 9 a.m.
CDT:
http://investors.brinker.com/events/event-details/q3-2020-brinker-international-earnings-conference-call
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 Brinker's website until the end of the day May 13,
2020.
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 Brinker's website under the Financial Information
section of the Investor tab.
FORWARD CALENDAR
- Earnings release call for the fourth quarter of fiscal 2020 on
August 12, 2020
- SEC Form 10-Q for the third quarter of fiscal 2020 filing on or
before May 4, 2020
ABOUT BRINKER
Brinker International, Inc. is one of the world's leading casual
dining restaurant companies. Based in Dallas, Texas, as of March 25, 2020,
Brinker owned, operated, or franchised 1,675 restaurants under the
names Chili's® Grill & Bar (1622 restaurants) and
Maggiano's Little Italy® (53 restaurants).
FORWARD-LOOKING STATEMENTS
The statements and tables contained in this release that are not
historical facts are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements are
based on our current plans and expectations and involve risks and
uncertainties which could cause actual results to differ materially
from our historical results or from those projected in
forward-looking statements. The forward-looking statements in the
press release are based on information available to us as of the
date any such statements are made and we assume no obligation to
update these forward-looking statements except as required by law.
These risks and uncertainties are, in many instances, beyond our
control. Such risks and uncertainties include, among other things,
the impact of competition, changes in consumer preferences,
consumer perception of food safety, reduced disposable income,
unfavorable publicity, increased minimum wages, governmental
regulations, the impact of mergers, acquisitions, divestitures and
other strategic transactions, the Company's ability to meet its
business strategy plan, third party delivery risks, loss of key
management personnel, failure to hire and retain high-quality
restaurant management, the impact of social media, failure to
protect the security of data of our guests and team members,
product availability, regional business and economic conditions,
litigation, franchisee success, downgrades in our credit ratings,
inflation, changes in the retail industry, technology failures,
failure to protect our intellectual property, outsourcing,
impairment of goodwill or assets, failure to maintain effective
internal control over financial reporting, actions of activist
shareholders, adverse weather conditions, terrorist acts, health
epidemics or pandemics (such as COVID-19), and tax reform, as well
as the risks described under the caption "Risk Factors" in our
Annual Report on Form 10-K and future filings with the Securities
and Exchange Commission.
BRINKER
INTERNATIONAL, INC.
|
Consolidated
Statements of Comprehensive Income (Unaudited)
|
(In millions,
except per share amounts)
|
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
March 25,
2020
|
|
March 27,
2019
|
|
March 25,
2020
|
|
March 27,
2019
|
Revenues
|
|
|
|
|
|
|
|
Company
sales
|
$
|
840.4
|
|
|
$
|
811.6
|
|
|
$
|
2,451.8
|
|
|
$
|
2,301.4
|
|
Franchise and other
revenues(1)
|
19.6
|
|
|
27.7
|
|
|
63.5
|
|
|
82.4
|
|
Total
revenues
|
860.0
|
|
|
839.3
|
|
|
2,515.3
|
|
|
2,383.8
|
|
Operating costs and
expenses
|
|
|
|
|
|
|
|
Company restaurants
(excluding depreciation and amortization)
|
|
|
|
|
|
|
|
Food and beverage
costs
|
226.7
|
|
|
216.7
|
|
|
653.6
|
|
|
609.5
|
|
Restaurant
labor
|
285.9
|
|
|
274.0
|
|
|
846.2
|
|
|
791.1
|
|
Restaurant
expenses
|
220.2
|
|
|
204.7
|
|
|
652.2
|
|
|
609.4
|
|
Company restaurant
expenses
|
732.8
|
|
|
695.4
|
|
|
2,152.0
|
|
|
2,010.0
|
|
Depreciation and
amortization
|
43.5
|
|
|
36.4
|
|
|
120.9
|
|
|
109.5
|
|
General and
administrative
|
23.3
|
|
|
40.8
|
|
|
95.9
|
|
|
110.0
|
|
Other (gains) and
charges(2)
|
19.3
|
|
|
(3.5)
|
|
|
30.7
|
|
|
(12.4)
|
|
Total operating costs
and expenses
|
818.9
|
|
|
769.1
|
|
|
2,399.5
|
|
|
2,217.1
|
|
Operating
income
|
41.1
|
|
|
70.2
|
|
|
115.8
|
|
|
166.7
|
|
Interest
expenses
|
14.3
|
|
|
15.3
|
|
|
44.2
|
|
|
46.3
|
|
Other (income),
net
|
(0.4)
|
|
|
(0.6)
|
|
|
(1.4)
|
|
|
(2.2)
|
|
Income before
provision for income taxes
|
27.2
|
|
|
55.5
|
|
|
73.0
|
|
|
122.6
|
|
Provision (benefit)
for income taxes
|
(3.6)
|
|
|
5.7
|
|
|
(0.6)
|
|
|
14.4
|
|
Net income
|
$
|
30.8
|
|
|
$
|
49.8
|
|
|
$
|
73.6
|
|
|
$
|
108.2
|
|
|
|
|
|
|
|
|
|
Basic net income per
share
|
$
|
0.83
|
|
|
$
|
1.33
|
|
|
$
|
1.97
|
|
|
$
|
2.80
|
|
|
|
|
|
|
|
|
|
Diluted net income
per share
|
$
|
0.81
|
|
|
$
|
1.31
|
|
|
$
|
1.94
|
|
|
$
|
2.75
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
37.2
|
|
|
37.5
|
|
|
37.3
|
|
|
38.6
|
|
|
|
|
|
|
|
|
|
Diluted weighted
average shares outstanding
|
37.8
|
|
|
38.1
|
|
|
38.0
|
|
|
39.3
|
|
|
|
|
|
|
|
|
|
Other comprehensive
income (loss)
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments(3)
|
$
|
(1.0)
|
|
|
$
|
0.2
|
|
|
$
|
(1.1)
|
|
|
$
|
(0.1)
|
|
Other comprehensive
income (loss)
|
(1.0)
|
|
|
0.2
|
|
|
(1.1)
|
|
|
(0.1)
|
|
Comprehensive
income
|
$
|
29.8
|
|
|
$
|
50.0
|
|
|
$
|
72.5
|
|
|
$
|
108.1
|
|
|
|
(1)
|
Franchise and other
revenues include Royalties and Franchise fees and other revenues.
Franchise fees and other revenues include Maggiano's banquet
service charge income, gift card breakage, gift card equalization,
gift card discount costs from third-party gift card sales,
advertising fees, digital entertainment revenues, delivery fee
income, franchise and development fees, merchandise income, and
retail royalty revenues.
|
(2)
|
Other (gains) and
charges included in the Consolidated Statements of Comprehensive
Income (Unaudited) included (in millions):
|
|
Thirteen Week
Periods Ended
|
|
Thirty-Nine Week
Periods Ended
|
|
March 25,
2020
|
|
March 27,
2019
|
|
March 25,
2020
|
|
March 27,
2019
|
COVID-19 related
charges
|
$
|
16.1
|
|
|
$
|
—
|
|
|
$
|
16.1
|
|
|
$
|
—
|
|
Foreign currency
transaction (gain) loss
|
2.3
|
|
|
(0.5)
|
|
|
2.2
|
|
|
(0.6)
|
|
Acquisition of
franchise restaurants costs, net of (gains)
|
1.1
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
Remodel-related
costs
|
0.6
|
|
|
1.7
|
|
|
2.1
|
|
|
4.8
|
|
Restaurant closure
charges
|
0.3
|
|
|
0.2
|
|
|
3.4
|
|
|
4.0
|
|
Corporate
headquarters relocation charges
|
0.2
|
|
|
5.2
|
|
|
0.9
|
|
|
6.2
|
|
Loss (gain) on sale
of assets, net
|
0.1
|
|
|
(6.0)
|
|
|
—
|
|
|
(6.8)
|
|
Restaurant impairment
charges
|
—
|
|
|
—
|
|
|
4.6
|
|
|
1.0
|
|
Lease modification
net (gain)
|
—
|
|
|
—
|
|
|
(3.1)
|
|
|
—
|
|
Sale leaseback
(gain), net of transaction charges
|
—
|
|
|
(4.3)
|
|
|
—
|
|
|
(22.0)
|
|
Other
|
(1.4)
|
|
|
0.2
|
|
|
1.9
|
|
|
1.0
|
|
|
$
|
19.3
|
|
|
$
|
(3.5)
|
|
|
$
|
30.7
|
|
|
$
|
(12.4)
|
|
|
|
(3)
|
Foreign currency
translation adjustment included in our Comprehensive income in
the Consolidated Statements of Comprehensive Income (Unaudited)
represents the unrealized impact of translating the financial
statements of our Canadian restaurants from Canadian dollars to
U.S. dollars. This amount is not included in Net income and would
only be realized upon disposition of these restaurants.
|
BRINKER
INTERNATIONAL, INC.
|
Condensed
Consolidated Balance Sheets (Unaudited)
|
(In
millions)
|
|
|
March
25, 2020(1)
|
|
June 26, 2019
|
ASSETS
|
|
|
|
Total current
assets
|
$
|
315.3
|
|
|
$
|
177.0
|
|
Net property and
equipment(2)
|
832.1
|
|
|
755.1
|
|
Operating lease
assets(3)
|
1,159.9
|
|
|
—
|
|
Deferred income
taxes, net(3)(4)
|
42.5
|
|
|
112.0
|
|
Other
assets
|
235.6
|
|
|
214.2
|
|
Total
assets
|
$
|
2,585.4
|
|
|
$
|
1,258.3
|
|
LIABILITIES AND
SHAREHOLDERS' DEFICIT
|
|
|
|
Total current
liabilities(3)(4)
|
$
|
520.0
|
|
|
$
|
421.6
|
|
Long-term debt and
finance leases, less current installments
|
1,428.9
|
|
|
1,206.6
|
|
Long-term operating
lease liabilities, less current portion(3)
|
1,154.2
|
|
|
—
|
|
Deferred gain on sale
leaseback transactions(4)
|
—
|
|
|
255.3
|
|
Other
liabilities
|
57.0
|
|
|
153.0
|
|
Total shareholders'
deficit(3)(4)
|
(574.7)
|
|
|
(778.2)
|
|
Total liabilities and
shareholders' deficit
|
$
|
2,585.4
|
|
|
$
|
1,258.3
|
|
|
|
(1)
|
The Condensed
Consolidated Balance Sheet at March 25, 2020 includes the
final purchase price allocation for the 116 Chili's restaurants
assets acquired and liabilities assumed on September 5,
2019.
|
(2)
|
Of the 1,117
company-owned restaurant locations, at March 25, 2020, we own
both building and land for 43 restaurant locations. The related
book values associated with these restaurants included land of
$34.1 million and buildings of $15.1 million.
|
(3)
|
Effective June 27,
2019, we adopted ASC 842, the new lease accounting standard that
required us to recognize operating lease assets and liabilities in
the balance sheet. Under our historical accounting, operating
leases were not recognized in the balance sheet. Prior results have
not been restated for the impact of this accounting change. The
impact of the new lease accounting standard did not significantly
impact our results of operations or cash flows.
|
(4)
|
Deferred gain on sale
leaseback transactions balance of $255.3 million, the related
short-term deferred gain balance recorded within Total current
liabilities of $19.3 million, and the associated Deferred income
taxes, net balance of $68.6 million, were eliminated upon adoption
of ASC 842 into Total shareholders' deficit as required by ASC
842.
|
BRINKER
INTERNATIONAL, INC.
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
(In
millions)
|
|
|
Thirty-Nine Week
Periods Ended
|
|
March 25,
2020
|
|
March 27,
2019
|
Cash flows from
operating activities
|
|
|
|
Net income
|
$
|
73.6
|
|
|
$
|
108.2
|
|
Adjustments to
reconcile Net income to Net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
120.9
|
|
|
109.5
|
|
Stock-based
compensation
|
9.0
|
|
|
13.0
|
|
Restructure charges
and other impairments
|
24.8
|
|
|
14.4
|
|
Net loss (gain) on
disposal of assets
|
1.1
|
|
|
(27.6)
|
|
Other
|
1.7
|
|
|
2.1
|
|
Changes in assets and
liabilities
|
6.7
|
|
|
(69.0)
|
|
Net cash provided by
operating activities
|
237.8
|
|
|
150.6
|
|
Cash flows from
investing activities
|
|
|
|
Payments for property
and equipment
|
(82.0)
|
|
|
(128.0)
|
|
Payments for
franchise restaurant acquisitions
|
(94.6)
|
|
|
(1.3)
|
|
Proceeds from sale of
assets
|
1.0
|
|
|
1.4
|
|
Proceeds from note
receivable
|
2.2
|
|
|
2.0
|
|
Insurance
recoveries
|
—
|
|
|
1.4
|
|
Proceeds from sale
leaseback transactions, net of related expenses
|
—
|
|
|
468.8
|
|
Net cash (used in)
provided by investing activities
|
(173.4)
|
|
|
344.3
|
|
Cash flows from
financing activities
|
|
|
|
Borrowings on
revolving credit facility
|
806.8
|
|
|
626.0
|
|
Payments on revolving
credit facility
|
(630.0)
|
|
|
(903.0)
|
|
Purchases of treasury
stock
|
(32.3)
|
|
|
(167.7)
|
|
Payments of
dividends
|
(43.3)
|
|
|
(46.0)
|
|
Payments on long-term
debt
|
(12.4)
|
|
|
(5.7)
|
|
Proceeds from
issuances of treasury stock
|
1.6
|
|
|
2.8
|
|
Payments for debt
issuance costs
|
(1.0)
|
|
|
—
|
|
Net cash provided by
(used in) financing activities
|
89.4
|
|
|
(493.6)
|
|
Net change in cash
and cash equivalents
|
153.8
|
|
|
1.3
|
|
Cash and cash
equivalents at beginning of period
|
13.4
|
|
|
10.9
|
|
Cash and cash
equivalents at end of period
|
$
|
167.2
|
|
|
$
|
12.2
|
|
BRINKER
INTERNATIONAL, INC.
|
Restaurant
Summary
|
|
|
Total
Restaurants
Open at
March 25, 2020
|
|
Fiscal
2020
|
|
|
Third Quarter
Openings
|
|
Fiscal Year
Openings
|
|
Full Year
Projected
Openings
|
New
Openings
|
|
|
|
|
|
|
|
Company-owned
restaurants
|
|
|
|
|
|
|
|
Chili's
domestic
|
1,060
|
|
|
1
|
|
|
6
|
|
|
6
|
|
Chili's
international
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Maggiano's
|
52
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
Company-owned
|
1,117
|
|
|
1
|
|
|
6
|
|
|
6
|
|
|
|
|
|
|
|
|
|
Franchise
restaurants
|
|
|
|
|
|
|
|
Chili's
domestic
|
178
|
|
|
—
|
|
|
2
|
|
|
2
|
|
Chili's
international
|
379
|
|
|
7
|
|
|
23
|
|
|
23
|
|
Maggiano's
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
franchise
|
558
|
|
|
7
|
|
|
25
|
|
|
25
|
|
|
|
|
|
|
|
|
|
Total Company-owned
and franchise restaurants
|
|
|
|
|
|
|
|
Chili's
domestic
|
1,238
|
|
|
1
|
|
|
8
|
|
|
8
|
|
Chili's
international
|
384
|
|
|
7
|
|
|
23
|
|
|
23
|
|
Maggiano's
|
53
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
1,675
|
|
|
8
|
|
|
31
|
|
|
31
|
|
|
|
|
|
|
|
|
|
Relocation
Openings
|
|
|
|
|
|
|
|
Chili's domestic
company-owned relocations
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Included in the Total Restaurants Open at March 25, 2020
are locations that have been temporarily closed due to the COVID-19
pandemic which include 10 Company-owned Chili's restaurants located
within a closed structure or closed due to local regulations, 32
domestic Chili's franchise locations, 203 Chili's international
franchise locations, and 1 Maggiano's franchise location.
Additionally, during this COVID-19 pandemic with the various
government restrictions, we have temporarily delayed construction
of new restaurants until we are able to safely resume. We do not
anticipate relocating any restaurants at this time.
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SOURCE Brinker International, Inc.