DALLAS - Aug. 11, 2016 // PRNewswire // - Brinker International, Inc. (NYSE: EAT) today announced results for the fiscal fourth quarter ended June 29, 2016.
Highlights include the following:
"We ended the fiscal year with improving trends and have returned to gaining share in the industry," saidWyman Roberts, chief executive officer and president. "We are also encouraged by the early results of our fiscal year 2017 initiatives. The strong cash flow generation of our business model gives us confidence to increase our leverage and return additional capital to shareholders."
1 Amounts are calculated based on comparable 13 weeks in each fiscal quarter.
2 Restaurant operating margin is defined as Company sales less Cost of sales, Restaurant Labor and Restaurant expenses and excludes depreciation and amortization expenses. Restaurant operating margin is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. 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 or other similarly titled measures of other companies.
3Free cash flow is defined as cash flows provided by operating activities less capital expenditures. Free cash flow is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to operating cash flow or other similarly titled measures of other companies.
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CHILI'S fourth quarter company sales increased 17.1 percent to $747.3 million from $638.2 million in the prior year primarily due to an increase in restaurant capacity resulting from the acquisition of 103 Chili's restaurants on June 25, 2015 as well as the additional operating week, partially offset by a decline in comparable restaurant sales. As compared to the prior year, Chili's restaurant operating margin1 declined primarily due to the impact of the acquired restaurants. Restaurant labor, as a percent of company sales, increased compared to the prior year due to higher wage rates. Cost of sales, as a percent of company sales, increased due to unfavorable menu item mix and commodity pricing primarily related to steak, partially offset by increased menu pricing and favorable commodity pricing related to burger meat. Restaurant expenses, as a percent of company sales, decreased due to leverage related to the additional operating week, lower workers' compensation insurance expenses and decreased advertising.
MAGGIANO'S fourth quarter company sales increased 7.9 percent to $108.1 million from $100.2 million in the prior year primarily due to an increase in restaurant capacity as well as the additional operating week, partially offset by a decline in comparable restaurant sales. As compared to the prior year, Maggiano's restaurant operating margin1improved. Restaurant expenses, as a percent of company sales, decreased compared to prior year due to leverage related to the additional operating week as well as lower advertising and workers' compensation insurance expenses. Cost of sales, as a percent of company sales, was positively impacted by increased menu pricing and favorable commodity pricing, partially offset by menu item changes. Restaurant labor, as a percent of company sales, increased compared to prior year due to higher wage rates, partially offset by lower incentive bonus.
1Restaurant operating margin is defined as Company sales less Cost of sales, Restaurant labor and Restaurant expenses and excludes depreciation and amortization expenses. Restaurant operating margin is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant-level operating efficiency and performance. 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 or other similarly titled measures of other companies.
FRANCHISE AND OTHER revenues increased 2.1 percent to $26.3 million for the fourth quarter compared to$25.8 million in the prior year driven primarily by higher royalty revenues related to Chili's retail food products and revenues associated with tabletop devices, partially offset by a decrease in royalty revenues resulting from the acquisition of 103 Chili's restaurants from a former franchisee. Brinker franchisees generated approximately $341 million in sales2 for the fourth quarter of fiscal 2016.
2Royalty revenues are recognized based on the sales generated and reported to the company by franchisees.
Depreciation and amortization expense increased $2.0 million for the quarter primarily due to depreciation on acquired restaurants, asset replacements and new restaurant openings, partially offset by an increase in fully depreciated assets.
General and administrative expense decreased approximately $0.6 million primarily due to lower performance-based compensation, partially offset by payroll expenses related to the additional operating week.
On a GAAP basis, the effective income tax rate increased to 31.7 percent in the current quarter from 29.7 percent in the prior year quarter primarily due to higher profits, partially offset by the impact of tax benefits primarily related to restaurant impairment and restaurant closure charges in the current quarter. Excluding the impact of special items, the effective income tax rate increased to 32.2 percent in the current quarter compared to 31.2 percent in the prior year quarter primarily due to higher profits.
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
2016 consist primarily of the impairment of restaurants, restaurant closures and severance charges.
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Fiscal 2017 contains 52 weeks versus 53 weeks in fiscal 2016. The company anticipates earnings per diluted share, excluding special items, in the range of $3.40 to $3.50. 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 adjusted earnings per diluted share, excluding special items, to US GAAP earnings per diluted share or forecasted adjusted free cash flow to US GAAP cash flows provided by operating activities.
Earnings are based on the following expectations:
The company believes providing fiscal 2017 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, excluding special items, and other key line items in the statement of comprehensive income 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. 11). 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. 8, 2016.
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.
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 29, 2016, Brinker owned, operated, or franchised 1,660 restaurants under the names Chili's® Grill & Bar (1,609 restaurants) and Maggiano's Little Italy® (51 restaurants).
The statements contained in this release that are not historical facts are forward-looking statements, including the Fiscal 2017 outlook. 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, 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.
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SOURCE Brinker International, Inc.
Joe Taylor
Investor Relations
(972) 770-9040
Aisha Fletcher
Media Relations
Media.requests@brinker.com
(800) 775-7290
Brinker International, Inc. is one of the world's leading casual dining restaurant companies.