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Brinker International Reports Increase In Year Over Year EPS
Highlights include the following:
- Earnings per diluted share, excluding special items, increased 20.0 percent to
$0.72 compared to$0.60 for the third quarter of fiscal 2012 (see non-GAAP reconciliation below) - On a GAAP basis, earnings per diluted share increased 26.8 percent to
$0.71 compared to$0.56 for the third quarter of fiscal 2012 - Restaurant operating margin1 improved approximately 70 basis points to 17.9 percent from 17.2 percent
Brinker 's operating income, excluding special items, improved 110 basis points from 9.8 percent to 10.9 percent primarily due to general and administrative savings in addition to the restaurant operating margin improvement mentioned aboveChili's comparable restaurant sales decreased 1.1 percent for the quarter consisting of a 0.4 percent and 4.3 percent decrease in January and February, respectively, offset by a 1.3 percent increase in March- Maggiano's comparable restaurant sales increased 0.4 percent, representing the 13th consecutive quarterly increase
- Franchise comparable restaurant sales increased 1.3 percent driven by a 5.1 percent increase in international franchise comparable restaurant sales
- The company repurchased approximately 1.8 million shares of its common stock for
$60.4 million in the third quarter - The company paid a dividend of
20 cents per share in the third quarter, an increase of 25 percent over the prior year third quarter - For the first nine months of fiscal 2013, cash flows provided by operating activities were
$222.6 million and capital expenditures totaled$98.7 million
"
1 |
Effective for the fiscal first quarter ended Sept. 26, 2012, revenues are reported in two separate captions—Company sales and Franchise and other revenues. Restaurant operating margin is now defined as Company sales less Cost of sales, Restaurant labor and Restaurant expenses. |
Table 1: Monthly and Q3 comparable restaurant sales |
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Q3 13 and Q3 12, company-owned, reported brands and franchise; percentage |
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Jan |
Feb |
March |
Q3 13 |
Q3 12 |
|||||||||||
Brinker International |
(0.1) |
(4.2) |
1.5 |
(0.9) |
4.5 |
||||||||||
Chili's Company-Owned |
|||||||||||||||
Comparable Restaurant Sales |
(0.4) |
(4.3) |
1.3 |
(1.1) |
4.6 |
||||||||||
Pricing Impact |
1.9 |
1.3 |
1.3 |
1.5 |
1.9 |
||||||||||
Mix-Shift |
0.5 |
0.2 |
1.3 |
0.6 |
0.9 |
||||||||||
Traffic |
(2.8) |
(5.8) |
(1.3) |
(3.2) |
1.8 |
||||||||||
Maggiano's |
|||||||||||||||
Comparable Restaurant Sales |
1.7 |
(3.4) |
2.5 |
0.4 |
3.9 |
||||||||||
Pricing Impact |
2.5 |
1.1 |
0.7 |
1.6 |
2.2 |
||||||||||
Mix-Shift |
0.0 |
(1.1) |
0.5 |
(0.2) |
0.2 |
||||||||||
Traffic |
(0.8) |
(3.4) |
1.3 |
(1.0) |
1.5 |
||||||||||
Franchise1 |
1.3 |
3.5 |
|||||||||||||
Domestic Comparable Restaurant Sales |
(0.3) |
3.8 |
|||||||||||||
International Comparable Restaurant Sales |
5.1 |
2.6 |
|||||||||||||
System-wide2 |
(0.2) |
4.2 |
1 |
Revenues generated by franchisees are not included in revenues on the consolidated statements of income; however, we generate royalty revenue and advertising fees based on franchisee revenues, where applicable. We believe including franchisee comparable restaurants revenues provides investors information regarding brand performance that is relevant to current operations and may impact future restaurant development. |
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
MAGGIANO'S third quarter company sales of
FRANCHISE AND OTHER revenues totaled
1 |
Royalty 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 decreased
Interest expense increased
Excluding the impact of special items, the effective income tax rate remained flat at 28.9 percent in the current quarter compared to the same quarter last year as the tax impact of increased earnings in the current quarter was offset by a credit related to the prior year. On a GAAP basis, the effective income tax rate increased to 28.7 percent in the current quarter as compared to 28.2 percent in the same quarter last year due to increased earnings in the current quarter and the tax benefit resulting from higher net charges related to special items in the prior year, partially offset by a credit related to the prior year.
Non-GAAP Reconciliation
Table 2: Reconciliation of net income excluding special items |
||||||||||||
Q3 13 and Q3 12; $ millions and $ per diluted share after-tax |
||||||||||||
Q3 13 |
EPS Q3 13 |
Q3 12 |
EPS Q3 12 |
|||||||||
Net Income |
52.0 |
0.71 |
44.9 |
0.56 |
||||||||
Other (Gains) and Charges1 |
0.9 |
0.01 |
(0.1) |
0.00 |
||||||||
Adjustment for Gift Card Breakage2 |
— |
— |
3.3 |
0.04 |
||||||||
Net Income excluding Special Items |
52.9 |
0.72 |
48.1 |
0.60 |
1 |
Pre-tax Other gains and charges was a $1.6 million charge and a $0.1 million gain in the third quarter of fiscal 2013 and 2012, respectively. |
2 |
The Company recognized a pre-tax $5.2 million reduction to revenue in the third quarter of fiscal 2012 resulting from a change in the estimate of gift card breakage. |
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 2013 filing on or before
May 6, 2013 ; and - Fourth quarter earnings release, before market opens,
Aug. 2, 2013 .
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, 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 Thirty-Nine Week Periods Ended March 27, March 28, March 27, March 28, Revenues: Company sales $ 724,693 $ 728,868 $ 2,057,490 $ 2,038,333 Franchise and other revenues (a) 18,066 13,177 58,540 54,018 Total revenues 742,759 742,045 2,116,030 2,092,351 Operating Costs and Expenses: Company restaurants Cost of sales 198,316 205,155 567,602 571,962 Restaurant labor 231,822 233,806 667,865 664,068 Restaurant expenses 164,537 164,230 489,781 489,872 Company restaurant expenses 594,675 603,191 1,725,248 1,725,902 Depreciation and amortization 33,222 30,929 98,830 93,265 General and administrative 33,986 40,006 102,289 104,040 Other gains and charges (b) 1,550 (104) 2,227 5,614 Total operating costs and expenses 663,433 674,022 1,928,594 1,928,821 Operating income 79,326 68,023 187,436 163,530 Interest expense 7,085 6,530 21,040 20,087 Other, net (573) (1,072) (2,096) (3,018) Income before provision for income taxes 72,814 62,565 168,492 146,461 Provision for income taxes 20,863 17,632 51,500 42,233 Net income $ 51,951 $ 44,933 $ 116,992 $ 104,228 Basic net income per share $ 0.73 $ 0.58 $ 1.61 $ 1.31 Diluted net income per share $ 0.71 $ 0.56 $ 1.56 $ 1.28 Basic weighted average shares outstanding 71,067 77,582 72,511 79,722 Diluted weighted average shares outstanding 73,341 79,735 74,873 81,658
2013
2012
2013
2012
(a) Franchise and other revenues includes royalties, development fees and franchise fees, banquet service charge income, and gift card activity (breakage and discounts). |
(b) Other gains and charges includes: |
Thirteen Week Periods Ended |
Thirty-Nine Week Periods Ended |
|||||||||||||||
March 27, 2013 |
March 28, 2012 |
March 27, 2013 |
March 28, 2012 |
|||||||||||||
Restaurant impairment charges |
$ |
— |
$ |
— |
$ |
661 |
$ |
1,098 |
||||||||
Restaurant closure charges |
305 |
1,032 |
2,887 |
4,154 |
||||||||||||
Severance and other benefits |
1,269 |
— |
1,269 |
100 |
||||||||||||
Gain on sale of assets, net |
(81) |
(25) |
(2,430) |
(1,365) |
||||||||||||
Other |
57 |
(1,111) |
(160) |
1,627 |
||||||||||||
$ |
1,550 |
$ |
(104) |
$ |
2,227 |
$ |
5,614 |
BRINKER INTERNATIONAL, INC. |
||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(In thousands) |
||||||||
March 27, 2013 |
June 27, 2012 |
|||||||
(Unaudited) |
||||||||
ASSETS |
||||||||
Current assets |
$ |
214,897 |
$ |
194,846 |
||||
Net property and equipment (a) |
1,029,921 |
1,043,564 |
||||||
Total other assets |
201,044 |
197,662 |
||||||
Total assets |
$ |
1,445,862 |
$ |
1,436,072 |
||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
Current installments of long-term debt |
$ |
27,528 |
$ |
27,334 |
||||
Current liabilities |
363,107 |
374,415 |
||||||
Long-term debt, less current installments |
677,309 |
587,890 |
||||||
Other liabilities |
132,709 |
136,560 |
||||||
Total shareholders' equity |
245,209 |
309,873 |
||||||
Total liabilities and shareholders' equity |
$ |
1,445,862 |
$ |
1,436,072 |
(a) |
At March 27, 2013, the company owned the land and buildings for 189 of the 865 company-owned restaurants. The net book values of the land and buildings associated with these restaurants totaled $141.4 million and $119.2 million, respectively. |
BRINKER INTERNATIONAL, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||||||
(In thousands) |
||||||||
Thirty-Nine Week Periods Ended |
||||||||
March 27, 2013 |
March 28, 2012 |
|||||||
Cash Flows From Operating Activities: |
||||||||
Net income |
$ |
116,992 |
$ |
104,228 |
||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
98,830 |
93,265 |
||||||
Restructure charges and other impairments |
3,792 |
5,042 |
||||||
Stock-based compensation |
12,909 |
10,393 |
||||||
Net loss on disposal of assets |
1,115 |
1,541 |
||||||
Changes in assets and liabilities |
(11,002) |
19,341 |
||||||
Net cash provided by operating activities |
222,636 |
233,810 |
||||||
Cash Flows from Investing Activities: |
||||||||
Payments for property and equipment |
(98,690) |
(85,177) |
||||||
Proceeds from sale of assets |
6,535 |
4,344 |
||||||
Investment in equity method investees |
— |
(1,083) |
||||||
Net cash used in investing activities |
(92,155) |
(81,916) |
||||||
Cash Flows from Financing Activities: |
||||||||
Purchases of treasury stock |
(191,799) |
(208,347) |
||||||
Borrowings on revolving credit facility |
110,000 |
— |
||||||
Payments of dividends |
(42,161) |
(37,850) |
||||||
Proceeds from issuances of treasury stock |
32,042 |
27,946 |
||||||
Payments on long-term debt |
(19,785) |
(12,187) |
||||||
Excess tax benefits from stock-based compensation |
7,811 |
924 |
||||||
Proceeds from issuance of long-term debt |
— |
70,000 |
||||||
Payments for deferred financing costs |
— |
(1,620) |
||||||
Net cash used in financing activities |
(103,892) |
(161,134) |
||||||
Net change in cash and cash equivalents |
26,589 |
(9,240) |
||||||
Cash and cash equivalents at beginning of period |
59,103 |
81,988 |
||||||
Cash and cash equivalents at end of period |
$ |
85,692 |
$ |
72,748 |
BRINKER INTERNATIONAL, INC. |
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RESTAURANT SUMMARY |
|||||||||
Third Quarter Net Openings/(Closings) Fiscal 2013 |
Total Restaurants March 27, 2013 |
Projected Openings Fiscal 2013 |
|||||||
Company-Owned Restaurants: |
|||||||||
Chili's |
(2) |
821 |
— |
||||||
Maggiano's |
— |
44 |
— |
||||||
(2) |
865 |
— |
|||||||
Franchise Restaurants: |
|||||||||
Chili's |
(5) |
447 |
2 |
||||||
International (a) |
2 |
276 |
30-35 |
||||||
(3) |
723 |
32-37 |
|||||||
Total Restaurants: |
|||||||||
Chili's |
(7) |
1,268 |
2 |
||||||
Maggiano's |
— |
44 |
— |
||||||
International (a) |
2 |
276 |
30-35 |
||||||
(5) |
1,588 |
32-37 |
(a) |
At March 27, 2013, there were 276 Chili's international franchise restaurants. |
SOURCE
Stacey Sullivan, Media Relations Tony Laday, Investor Relations, (800) 775-7290 (972) 770-8890