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Brinker International Reports Increases In Third Quarter Fiscal 2015 EPS And Comparable Restaurant Sales
Highlights include the following:
- Earnings per diluted share, excluding special items, increased 11.9 percent to
$0.94 compared to$0.84 for the third quarter of fiscal 2014 - On a GAAP basis, earnings per diluted share increased 24.4 percent to
$1.02 compared to$0.82 for the third quarter of fiscal 2014 Brinker International company sales increased 3.0 percent to$761.7 million and comparable restaurant sales at company-owned restaurants increased 1.7 percent. Comparable restaurant sales increased 2.6 percent excluding the impact ofChristmas Day moving to the third quarterChili's company-owned comparable restaurant sales increased 1.9 percent- Maggiano's comparable restaurant sales increased 0.1 percent, representing the 21st consecutive quarterly increase
Chili's franchise comparable restaurant sales increased 2.5 percent which includes a 3.1 percent increase for U.S. franchise restaurants and a 1.2 percent increase for international franchise restaurants- Restaurant operating margin,1 as a percent of company sales, improved approximately 30 basis points to 18.9 percent compared to 18.6 percent for the third quarter of fiscal 2014
- For the first nine months of fiscal 2015, cash flows provided by operating activities were
$274.9 million and capital expenditures totaled$107.1 million . Free cash flow2 was approximately$167.8 million - The company repurchased approximately 1.7 million shares of its common stock for
$104.2 million in the third quarter and a total of approximately 3.9 million shares for$217.0 million year-to-date - The company paid a dividend of
28 cents per share in the third quarter, an increase of 17 percent over the prior year third quarter, and declared a dividend of28 cents per share to be paid in the fourth quarter
"
1 |
Restaurant operating margin is defined as Company sales less Cost of sales, Restaurant Labor and Restaurant expenses. |
2 |
Free cash flow is defined as cash flows provided by operating activities less capital expenditures. |
Table 1: Q3 comparable restaurant sales |
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Q3 F15 and Q3 F14, company-owned, reported brands and franchise; percentage |
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Q3 15 |
Q3 14 |
|||||
Brinker International |
1.7 |
0.7 |
||||
Chili's Company-Owned |
||||||
Comparable Restaurant Sales |
1.9 |
0.7 |
||||
Pricing Impact |
0.6 |
1.1 |
||||
Mix-Shift |
1.5 |
0.8 |
||||
Traffic |
(0.2) |
(1.2) |
||||
Maggiano's |
||||||
Comparable Restaurant Sales |
0.1 |
0.2 |
||||
Pricing Impact |
2.5 |
1.5 |
||||
Mix-Shift |
(1.1) |
(0.4) |
||||
Traffic |
(1.3) |
(0.9) |
||||
Chili's Franchise1 |
2.5 |
0.2 |
||||
U.S. Comparable Restaurant Sales |
3.1 |
0.1 |
||||
International Comparable Restaurant Sales |
1.2 |
0.6 |
||||
Chili's Domestic2 |
2.2 |
0.5 |
||||
System-wide3 |
2.0 |
0.5 |
||||
1 |
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 franchise comparable restaurant sales provides investors information regarding brand performance that is relevant to current operations and may impact future restaurant development. |
|
2 |
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. |
|
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 franchise operated restaurants. |
Quarterly Operating Performance
MAGGIANO'S third quarter company sales increased 5.8 percent to
1 Restaurant operating margin is defined as Company sales less Cost of sales, Restaurant labor and Restaurant expenses.
2As compared to the prior year, the
FRANCHISE AND OTHER revenues increased 11.9 percent to
3Royalty revenues are recognized based on the sales generated and reported to the company by franchisees.
Other
Depreciation and amortization expense increased
General and administrative expense increased
On a GAAP basis, the effective income tax rate increased to 32.1 percent in the current quarter from 30.4 percent in the prior year quarter primarily due to increased earnings, partially offset by the impact of tax credit changes. Excluding the impact of special items, the effective income tax rate increased to 31.5 percent in the current quarter compared to 30.6 percent in the prior year primarily due to increased earnings, partially offset by the impact of tax credit changes.
Non-GAAP Reconciliation
Table 2: Reconciliation of net income excluding special items |
||||||||||||
Q3 15 and Q3 14; $ millions and $ per diluted share after-tax |
||||||||||||
Q3 15 |
EPS Q3 15 |
Q3 14 |
EPS Q3 14 |
|||||||||
Net Income |
65.4 |
1.02 |
56.3 |
0.82 |
||||||||
Other (Gains) and Charges, net of taxes1 |
(5.2) |
(0.08) |
1.3 |
0.02 |
||||||||
Net Income excluding Special Items |
60.2 |
0.94 |
57.6 |
0.84 |
||||||||
1 |
Pre-tax Other gains and charges included a gain of $8.5 million and a charge of $2.1 million in the third quarter of fiscal 2015 and 2014, respectively. See footnote "b" to the consolidated statements of comprehensive income for additional details. |
Guidance Policy
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
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
Forward Calendar
- SEC Form 10-Q for third quarter fiscal 2015 filing on or before
- Fourth quarter earnings release, before market opens,
About
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, inflation, technology failures, and failure to protect the security of data of our guests and teammates.
BRINKER INTERNATIONAL, INC. |
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME |
|||||||||||||||||
(In thousands, except per share amounts) |
|||||||||||||||||
(Unaudited) |
|||||||||||||||||
Thirteen Week Periods Ended |
Thirty-Nine Week Periods Ended |
||||||||||||||||
March 25, 2015 |
March 26, 2014 |
March 25, 2015 |
March 26, 2014 |
||||||||||||||
Revenues: |
|||||||||||||||||
Company sales |
$ |
761,736 |
$ |
739,200 |
$ |
2,166,368 |
$ |
2,088,087 |
|||||||||
Franchise and other revenues (a) |
22,479 |
20,093 |
71,763 |
61,528 |
|||||||||||||
Total revenues |
784,215 |
759,293 |
2,238,131 |
2,149,615 |
|||||||||||||
Operating costs and expenses: |
|||||||||||||||||
Company restaurants (excluding depreciation and amortization) |
|||||||||||||||||
Cost of sales |
203,960 |
195,439 |
582,507 |
561,276 |
|||||||||||||
Restaurant labor |
240,105 |
233,890 |
695,114 |
672,525 |
|||||||||||||
Restaurant expenses |
173,611 |
172,459 |
528,047 |
511,293 |
|||||||||||||
Company restaurant expenses |
617,676 |
601,788 |
1,805,668 |
1,745,094 |
|||||||||||||
Depreciation and amortization |
36,599 |
34,218 |
108,213 |
100,912 |
|||||||||||||
General and administrative |
35,194 |
34,009 |
100,488 |
98,792 |
|||||||||||||
Other gains and charges (b) |
(8,477) |
2,088 |
747 |
4,315 |
|||||||||||||
Total operating costs and expenses |
680,992 |
672,103 |
2,015,116 |
1,949,113 |
|||||||||||||
Operating income |
103,223 |
87,190 |
223,015 |
200,502 |
|||||||||||||
Interest expense |
7,361 |
7,068 |
21,709 |
21,128 |
|||||||||||||
Other, net |
(454) |
(693) |
(1,568) |
(1,736) |
|||||||||||||
Income before provision for income taxes |
96,316 |
80,815 |
202,874 |
181,110 |
|||||||||||||
Provision for income taxes |
30,889 |
24,552 |
63,403 |
55,891 |
|||||||||||||
Net income |
$ |
65,427 |
$ |
56,263 |
$ |
139,471 |
$ |
125,219 |
|||||||||
Basic net income per share |
$ |
1.04 |
$ |
0.85 |
$ |
2.19 |
$ |
1.88 |
|||||||||
Diluted net income per share |
$ |
1.02 |
$ |
0.82 |
$ |
2.14 |
$ |
1.83 |
|||||||||
Basic weighted average shares outstanding |
62,891 |
66,479 |
63,719 |
66,661 |
|||||||||||||
Diluted weighted average shares outstanding |
64,091 |
68,342 |
65,108 |
68,591 |
|||||||||||||
Other comprehensive loss: |
|||||||||||||||||
Foreign currency translation adjustment (c) |
$ |
(2,847) |
$ |
(1,108) |
$ |
(7,183) |
$ |
(1,862) |
|||||||||
Other comprehensive loss |
(2,847) |
(1,108) |
(7,183) |
(1,862) |
|||||||||||||
Comprehensive income |
$ |
62,580 |
$ |
55,155 |
$ |
132,288 |
$ |
123,357 |
|||||||||
(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 statements of comprehensive income. This income was previously included in Restaurant expenses. The prior year consolidated statements of comprehensive income has been adjusted to conform to the fiscal 2015 presentation. This adjustment has no effect on net income previously reported. |
(b) |
Other gains and charges include: |
Thirteen Week Periods Ended |
Thirty-Nine Week Periods Ended |
||||||||||||||
March 25, 2015 |
March 26, 2014 |
March 25, 2015 |
March 26, 2014 |
||||||||||||
Litigation |
$ |
(8,553) |
$ |
— |
$ |
(2,753) |
$ |
— |
|||||||
Restaurant impairment charges |
— |
— |
747 |
1,285 |
|||||||||||
Restaurant closure charges |
76 |
1,224 |
1,457 |
2,330 |
|||||||||||
Loss (Gain) on the sale of assets, net |
— |
— |
1,093 |
(579) |
|||||||||||
Impairment of liquor licenses |
— |
— |
175 |
— |
|||||||||||
Other |
— |
864 |
28 |
1,279 |
|||||||||||
$ |
(8,477) |
$ |
2,088 |
$ |
747 |
$ |
4,315 |
(c) |
The foreign currency translation adjustment included in comprehensive income on the consolidated statements of comprehensive income represents the unrealized impact of translating the financial statements of the Canadian restaurants and the Mexican joint venture from their respective functional currencies to U.S. dollars. This amount is not included in net income and would only be realized upon disposition of the businesses. |
BRINKER INTERNATIONAL, INC. |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
March 25, 2015 |
June 25, 2014 |
|||||||
ASSETS |
||||||||
Current assets |
$ |
190,046 |
$ |
210,854 |
||||
Net property and equipment (a) |
1,037,425 |
1,056,454 |
||||||
Total other assets |
209,848 |
223,296 |
||||||
Total assets |
$ |
1,437,319 |
$ |
1,490,604 |
||||
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY |
||||||||
Current installments of long-term debt |
3,115 |
$ |
27,884 |
|||||
Other current liabilities |
403,526 |
438,226 |
||||||
Long-term debt, less current installments |
933,207 |
832,302 |
||||||
Other liabilities |
129,600 |
129,098 |
||||||
Total shareholders' (deficit) equity |
(32,129) |
63,094 |
||||||
Total liabilities and shareholders' (deficit) equity |
$ |
1,437,319 |
$ |
1,490,604 |
(a) |
At March 25, 2015, the company owned the land and buildings for 189 of the 889 company-owned restaurants. The net book values of the land and buildings associated with these restaurants totaled $142.2 million and $115.3 million, respectively. |
BRINKER INTERNATIONAL, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(In thousands) |
||||||||
(Unaudited) |
||||||||
Thirty-Nine Week Periods Ended |
||||||||
March 25, 2015 |
March 26, 2014 |
|||||||
Cash Flows From Operating Activities: |
||||||||
Net income |
$ |
139,471 |
$ |
125,219 |
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
108,213 |
100,912 |
||||||
Stock-based compensation |
11,587 |
12,990 |
||||||
Restructure charges and other impairments |
8,402 |
3,836 |
||||||
Net loss on disposal of assets |
3,819 |
3,208 |
||||||
Changes in assets and liabilities |
3,415 |
30,935 |
||||||
Net cash provided by operating activities |
274,907 |
277,100 |
||||||
Cash Flows from Investing Activities: |
||||||||
Payments for property and equipment |
(107,108) |
(113,980) |
||||||
Proceeds from sale of assets |
1,950 |
833 |
||||||
Net cash used in investing activities |
(105,158) |
(113,147) |
||||||
Cash Flows from Financing Activities: |
||||||||
Borrowings on revolving credit facility |
442,750 |
98,000 |
||||||
Purchases of treasury stock |
(217,019) |
(191,811) |
||||||
Payments on long-term debt |
(188,758) |
(19,890) |
||||||
Payments on revolving credit facility |
(177,000) |
(40,000) |
||||||
Payments of dividends |
(53,248) |
(47,556) |
||||||
Excess tax benefits from stock-based compensation |
16,920 |
17,972 |
||||||
Proceeds from issuances of treasury stock |
14,965 |
24,574 |
||||||
Payments for deferred financing costs |
(2,501) |
— |
||||||
Net cash used in financing activities |
(163,891) |
(158,711) |
||||||
Net change in cash and cash equivalents |
5,858 |
5,242 |
||||||
Cash and cash equivalents at beginning of period |
57,685 |
59,367 |
||||||
Cash and cash equivalents at end of period |
$ |
63,543 |
$ |
64,609 |
BRINKER INTERNATIONAL, INC. |
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RESTAURANT SUMMARY |
||||||||||
Third Quarter Openings Fiscal 2015 |
Total Restaurants March 25, 2015 |
Projected Openings |
||||||||
Company-Owned Restaurants: |
||||||||||
Chili's Domestic |
2 |
827 |
8-10 |
|||||||
Chili's International |
— |
13 |
1 |
|||||||
Maggiano's |
— |
49 |
3 |
|||||||
2 |
889 |
12-14 |
||||||||
Franchise Restaurants: |
||||||||||
Chili's Domestic |
1 |
435 |
5 |
|||||||
Chili's International |
2 |
305 |
28-30 |
|||||||
3 |
740 |
33-35 |
||||||||
Total Restaurants: |
||||||||||
Chili's Domestic |
3 |
1,262 |
13-15 |
|||||||
Chili's International |
2 |
318 |
29-31 |
|||||||
Maggiano's |
— |
49 |
3 |
|||||||
5 |
1,629 |
45-49 |
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/brinker-international-reports-increases-in-third-quarter-fiscal-2015-eps-and-comparable-restaurant-sales-300069047.html
SOURCE
JILL CUTHBERTSON, INVESTOR RELATIONS, (972) 980-9917; ASHLEY JOHNSON, MEDIA RELATIONS, (800) 775-7290