DALLAS - Aug. 7, 2014 // PRNewswire // - Brinker International, Inc. (NYSE: EAT) today announced results for the fiscal fourth quarter ended June 25, 2014.
Highlights include the following:
"We closed fiscal 2014 with an increase in earnings per diluted share of 15.8 percent, our fourth consecutive year of double-digit growth in a competitive environment," said Wyman Roberts, Chief Executive Officer and President. "These results demonstrate our ability to deliver sustained value to our shareholders."
View Original for Full Data Table
View Original for Full Data Table
CHILI'S fourth quarter company sales increased to $639.8 million from $615.7 million in the prior year primarily due to increases in comparable restaurant sales, the acquisition of 11 restaurants in Canada at the end of the prior fiscal year, as well as increases in restaurant capacity. As compared to the prior year, the Chili's operating margin metric was negatively impacted by the classification of revenues and expenses associated with Ziosk. The revenues associated with Ziosk are included in Franchise and other revenues while the associated expense is included in Restaurant expenses, a component of the margin calculation. Restaurant expenses, as a percent of company sales, increased due to Ziosk equipment charges, new restaurant development and higher advertising, partially offset by leverage related to higher revenue. Restaurant labor, as a percent of company sales, was negatively impacted by increased overtime and training, partially offset by leverage related to higher revenue. Cost of sales, as a percent of company sales, was favorably impacted by menu pricing, menu item changes, improved waste control, and efficiency gains related to new fryer equipment, partially offset by unfavorable pricing primarily related to cheese, avocados and limes which are market based.
MAGGIANO'S fourth quarter company sales of $95.2 million increased 1.9 percent primarily driven by increases in restaurant capacity, menu pricing and traffic. As compared to the prior year, Maggiano's restaurant operating margin was negatively impacted by higher facilities costs and new restaurant development. Cost of sales, as a percent of company sales, was negatively impacted by unfavorable mix changes and commodity pricing on seafood, partially offset by increased menu pricing and favorable commodity pricing on bread and other items. Restaurant labor, as a percent of company sales, was positively impacted by lower performance based compensation.
FRANCHISE AND OTHER revenues totaled $23.7 million for the fourth quarter, an increase of 13.4 percent compared to $20.9 million in the prior year driven primarily by the revenues associated with Ziosk. U.S. franchise comparable restaurant sales increased 1.4 percent and international comparable restaurant sales increased 0.8 percent. Brinker franchisees generated approximately $423 million in sales1 for the fourth quarter of fiscal 2014.
1Royalty revenues are recognized based on the sales generated and reported to the company by franchisees.
Depreciation and amortization expense increased $2.5 million for the quarter primarily due to investments in the Chili's reimage program, fryer equipment, new restaurant openings, as well as the acquisition of 11 restaurants in Canada at the end of the prior fiscal year, partially offset by an increase in fully depreciated assets.
General and administrative expense increased $1.1 million primarily due to information technology expenses in support of sales driving initiatives and tax consulting costs.
Other gains and charges in the fourth quarter of fiscal 2014 includes pre-tax charges of approximately $39.5 million related to various litigation matters including a class action litigation pending in California. In August 2004, certain current and former hourly restaurant team members filed a putative class action lawsuit against Brinker in California Superior Court alleging violations of California labor laws with respect to meal periods and rest breaks. The parties participated in mediation regarding this case on April 8, 2014, where preliminary settlement discussions began that ultimately culminated in a preliminary settlement agreement being reached on Aug. 6, 2014. This preliminary settlement agreement remains subject to court approval and seeks to resolve all claims in exchange for a maximum settlement payment not to exceed $56.5 million. The company established a reserve of approximately $39.0 million related to this pending class action litigation, but the actual amount of any settlement payment could vary from the company's reserve and will be subject to many factors including approval by the court, claims process, and other matters typically associated with the potential settlement of complex class action litigation. The aggregate litigation reserves of approximately $39.5 million established in the fourth quarter are based on the terms set forth in the applicable agreements and the company's reasonable expectations regarding future events.
On a GAAP basis, the effective income tax rate decreased to 18.1 percent in the current quarter from 25.0 percent in the prior year primarily due to the impact of tax benefits related to special items in the current quarter. Excluding the impact of special items, the effective income tax rate increased to 29.4 percent in the current quarter compared to 28.3 percent in the prior year primarily due to an increase in the amount of reserves established for uncertain tax positions.
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. Special items in the fourth quarter of fiscal 2014 consist primarily of charges related to litigation reserves, the impairment of restaurants, as well as charges associated with closed restaurants.
View Original for Full Data Table
View Original for Full Data Table
View Original for Full Data Table
The company believes providing fiscal 2015 earnings per diluted share guidance provides investors the appropriate insight into the company's ongoing operating performance.
Brinker provides annual guidance as it relates to comparable restaurant sales, earnings per diluted share, and other key line items in the comprehensive 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.
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 Brinker website (www.brinker.com) at 9 a.m. CDT today (Aug. 7). 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 Sept. 4, 2014.
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 Brinker website under the Financial Information section of the Investor tab.
- SEC Form 10-K for fiscal 2014 filing on or before Aug. 25, 2014; and
- First quarter earnings release, before market opens, Oct. 21, 2014.
Brinker International, Inc. is one of the world's leading casual dining restaurant companies. Founded in 1975 and based in Dallas, Texas, as of June 25, 2014, Brinker owned, operated, or franchised 1,615 restaurants under the names Chili's® Grill & Bar (1,569 restaurants) and Maggiano's Little Italy® (46 restaurants).
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 and inflation.
SOURCE Brinker International, Inc.
Greg Artkop
Media Relations
(800) 775-7290
Chris Bremer
Investor Relations
(972) 980-9917
Brinker International, Inc. is one of the world's leading casual dining restaurant companies.