DALLAS, Oct. 28, 2020 /PRNewswire/ -- Brinker International, Inc. (NYSE: EAT) today announced results for the first quarter of fiscal 2021 ended September 23, 2020 and provided a business update related to the second quarter of fiscal 2021.

"We continue to deliver impressive results, returning to positive earnings in the first quarter," said Wyman Roberts, CEO and President. "The team has responded to this unprecedented environment by unlocking organic growth through the introduction of It's Just Wings, skillfully managing our P&L, and further reducing our debt levels, all resulting in a sustainable growth model that serves both our guests and our shareholders."

Fiscal 2021 Highlights - First Quarter

Financial metrics for the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020 were negatively impacted by the ongoing COVID-19 pandemic. Total revenues declined due to capacity limitations and personal safety preferences, partially offset by increased off-premise sales and incremental capacity from the acquisition of 116 Chili's restaurants in the first quarter of fiscal 2020 on September 5, 2019. For non-GAAP information and related reconciliations, refer to the tables and information at the end of this earnings release.

• Net income per diluted share, on a GAAP basis, in the first quarter of fiscal 2021 decreased 41.0% to $0.23 compared to $0.39 in the first quarter of fiscal 2020
• Net income per diluted share, excluding special items, in the first quarter of fiscal 2021 decreased 31.7% to $0.28 compared to $0.41 in the first quarter of fiscal 2020
• Net cash provided by operating activities in the first quarter of fiscal 2021 was $82.8 million, and capital expenditures totaled $13.6 million resulting in free cash flow of $69.2 million
• Net repayments of $46.6 million were made on the revolving credit facility during the first quarter of fiscal 2021 resulting in total available liquidity of $632.5 million as of September 23, 2020

Second Quarter of Fiscal 2021 Guidance

We are providing a financial outlook for the second quarter of fiscal 2021. The uncertainties created by the ongoing COVID-19 pandemic, as well as other risks and uncertainties, could cause actual results to differ materially from those projected.

• Comparable restaurant sales are expected to be in the negative mid-single digit range
• Net income per diluted share, excluding special items, is expected to be in the range of $0.40 to $0.60
• Weighted average diluted shares is expected to be in the range of 45.0 million to 46.0 million

Fiscal 2021 is a 53-week year, and includes an extra operating week in the fourth quarter.

We are unable to reliably forecast special items such as restaurant impairments, restaurant closures, reorganization charges and legal settlements without unreasonable effort. As such, we do not present a reconciliation of forecasted non-GAAP measures to the corresponding GAAP measures. If special items are reported during fiscal 2021, reconciliations to the appropriate GAAP measures will be provided.

First Quarter of Fiscal 2021 Operating Performance

Segment Performance

At the end of the first quarter of fiscal 2021 substantially all our Company-owned restaurant dining rooms or patios were open in some capacity. Capacity restrictions related to the ongoing COVID-19 pandemic vary by location due to state and local mandates. These capacity restrictions and personal safety preferences have resulted in lower dining room guest traffic and many guests have shifted to our off-premise dining options. This shift has changed the staffing requirements in the restaurants and other expenses associated with off-premise which are noted below.

Chili's

• Chili's Company sales decreased primarily due to lower dining room sales, partially offset by increased off-premise sales including It's Just Wings, and incremental capacity from the acquisition of 116 Chili's restaurants in the first quarter of fiscal 2020 on September 5, 2019
• Chili's Company restaurant expenses, as a percentage of Company sales, decreased primarily due to lower advertising expenses, lower manager and hourly labor expenses, and lower repairs and maintenance expenses. These decreases were partially offset by sales deleverage and higher expenses primarily related to delivery fees and supplies in connection with the growth in off-premise sales

Maggiano's

• Maggiano's Company sales decreased primarily due to lower dining room sales, partially offset by increased off-premise sales
• Maggiano's Company restaurant expenses, as a percentage of Company sales, increased primarily due to sales deleverage and higher expenses primarily related to delivery fees and supplies in connection with the growth in off-premise sales. These increases were partially offset by lower manager and hourly labor expenses, repairs and maintenance expenses, credit card fees, utilities expenses, advertising expenses, favorable menu item mix and favorable menu pricing

Franchise and other revenues

• Franchise and other revenues include royalties and advertising fees that are earned based on franchise sales. Our franchisees generated sales of approximately $164.0 million in the first quarter of fiscal 2021 compared to $298.3 million in the first quarter of fiscal 2020. This decrease is primarily due to the ongoing impact of the COVID-19 pandemic on our domestic and global franchise restaurants, and the acquisition of 116 Chili's restaurants from a franchisee in the first quarter of fiscal 2020
• Maggiano's Franchise and other revenues decreased primarily due to lower banquet volume

Income Taxes

• On a GAAP basis, the effective income tax rate was a benefit of 4.9% in the first quarter of fiscal 2021 compared to an expense of 11.3% in the first quarter of fiscal 2020 primarily driven by excess tax benefits associated with stock-based compensation and lower income before income taxes. Excluding the impact of special items (see non-GAAP reconciliation below for details), the effective income tax rate decreased to 9.0% in the first quarter of fiscal 2021 compared to 10.5% in the first quarter of fiscal 2020

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, October 28, 2020 at 9 a.m. CDT:

http://investors.brinker.com/events/event-details/q1-2021-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 November 11, 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

• SEC Form 10-Q for the first quarter of fiscal 2021 filing on or before November 2, 2020
• Earnings release call for the second quarter of fiscal 2021 on January 27, 2021

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.

About Brinker

Brinker International, Inc. is one of the world's leading casual dining restaurant companies. Based in Dallas, Texas, as of September 23, 2020, Brinker owned, operated, or franchised 1,660 restaurants under the names Chili's^® Grill & Bar (1,607 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, and are currently, or in the future could be, amplified by the novel strain of the coronavirus ("COVID-19") pandemic. Such risks and uncertainties include, among other things, uncertainty of the magnitude, duration, geographic reach and impact of the COVID-19 pandemic on local, national and global economies; the current, and uncertain future, impact of the COVID-19 pandemic and governments' responses to it on our industry, business, growth, reputation, projections, prospects, financial condition, operations, cash flows, and liquidity; the adequacy or effectiveness of steps we take to respond to the COVID-19 crisis, including cost reduction or other mitigation programs; 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; 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; 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 and uncertainties described in "Risk Factors" in our Annual Report on Form 10-K and future filings with the Securities and Exchange Commission.

Of the 1,116 Company-owned restaurants, at September 23, 2020, we own both the building and land for 42 restaurants. The related book values associated with these restaurants included land of $33.1 million and buildings of $13.0 million.

Included in the Total Restaurants Open at September 23, 2020 are locations that have been temporarily closed due to the COVID-19 pandemic which include four Company-owned Chili's restaurants, seven domestic Chili's franchise locations, and 27 Chili's international franchise locations. Additionally, during the first quarter of fiscal 2021, we resumed construction of new restaurants and opened 3 Chili's domestic locations.

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 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 delivery service income, gift card breakage, banquet service charges and digital entertainment revenues. 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.

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SOURCE Brinker International, Inc.

MIKA WARE, INVESTOR RELATIONS, investor.relations@brinker.com; MEDIA RELATIONS, media.requests@brinker.com, (800) 775-7290