DALLAS - Nov. 1, 2017 // PRNewswire // - Brinker International, Inc. (NYSE: EAT) today announced results for the fiscal first quarter ended Sept. 27, 2017.
Highlights include the following:
"As anticipated, our first quarter was challenging including unique weather events," said Wyman Roberts, chief executive officer and president. "However, late in the quarter, we successfully introduced our new menu and implemented our operational focus on speed. We believe both are fundamental to driving improved traffic at Chili's."
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Quarterly Operating Performance
CHILI'S first quarter company sales decreased 3.2 percent to $627.6 million from $648.6 million in the prior year primarily due to a decline in comparable restaurant sales including the impact of temporary restaurant closures associated with Hurricanes Harvey and Irma. As compared to the prior year, Chili'srestaurant operating margin1 declined. Restaurant labor, as a percent of company sales, increased compared to the prior year due to higher wage rates and sales deleverage. Restaurant expenses, as a percent of company sales, decreased due to lower advertising and repairs and maintenance expenses, partially offset by sales deleverage. Cost of sales, as a percent of company sales, remained flat compared to the prior year.
MAGGIANO'S first quarter company sales increased 0.6 percent to $89.3 million from $88.8 million in the prior year primarily due to an increase in restaurant capacity, partially offset by a decrease in comparable restaurant sales including the impact of temporary restaurant closures associated with Hurricanes Harvey and Irma. As compared to the prior year, Maggiano's restaurant operating margin1 declined. Cost of sales, as a percent of company sales, was negatively impacted by unfavorable menu item mix and commodity pricing, partially offset by increased menu pricing. Restaurant labor, as a percent of company sales, increased compared to prior year due to higher wage rates, partially offset by lower incentive bonuses. Restaurant expenses, as a percent of company sales, decreased primarily due to lower repairs and maintenance expenses.
1Restaurant operating margin is defined as Company sales less Cost of sales, Restaurant labor and Restaurant expenses and excludes Depreciation and amortization expenses. (See non-GAAP reconciliation below)
FRANCHISE AND OTHER revenues increased 6.2 percent to $22.4 million for the first quarter of fiscal 2018 compared to $21.1 million in the prior year first quarter primarily due to higher gift card related revenues.
Other
Depreciation and amortization expense decreased $0.4 million for the current quarter compared to the first quarter of fiscal 2017 primarily due to an increase in fully-depreciated assets and restaurant closures, partially offset by depreciation on asset replacements and new restaurant openings.
General and administrative expense decreased $0.2 million for the current quarter compared to the first quarter of fiscal 2017 primarily due to lower compensation-related expenses, partially offset by higher professional fees.
On a GAAP basis, the effective income tax rate increased to 34.8 percent in the current quarter from 29.5 percent in the first quarter of fiscal 2017. In the first quarter of fiscal 2018, we adopted an accounting standard (ASU 2016-09) related to employee share-based payments that requires the recognition of excess tax benefits and tax deficiencies resulting from the settlement of those awards in the provision for income taxes in the consolidated statements of comprehensive income. The increase in the GAAP basis effective tax rate in the current quarter was primarily due to a tax deficiency related to share-based payments, partially offset by lower profits in the current quarter compared to the first quarter of 2017. Excluding the impact of special items, which includes the adoption of the accounting standard, the effective income tax rate decreased to 28.0 percent in the current quarter compared to 30.9 percent in the first quarter of fiscal 2017 primarily due to lower profits.
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 operating results. Non-GAAP disclosures should not be viewed as a substitute for operating 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.
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Guidance Policy
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 statements of comprehensive income and will only provide updates if there is a material change versus the original guidance. We do not provide annual guidance as it relates to US GAAP earnings per diluted share as we are unable to reliably forecast special items such as restaurant impairments, restaurant closures, reorganization charges and legal settlements without unreasonable effort.
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 at 9 a.m. CDT today (Nov. 1) -
http://investors.brinker.com/phoenix.zhtml?c=119205&p=irol-EventDetails&EventId=5263819
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 Nov. 29, 2017.
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 2018 filing on or before Nov. 6, 2017; and
- Second quarter earnings release, before market opens, Jan. 30, 2018.
About Brinker
Brinker International, Inc. is one of the world's leading casual dining restaurant companies. Founded in 1975 and based in Dallas, Texas, as of September 27, 2017, Brinker owned, operated, or franchised 1,682 restaurants under the names Chili's® Grill & Bar (1,630 restaurants) and Maggiano's Little Italy® (52 restaurants).
Forward-Looking Statements
The statements 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. These risks and uncertainties are, in many instances, beyond our control. Such risks and uncertainties include, among other things, general business and economic conditions, financial and credit market conditions, litigation, 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, loss of key management personnel, product availability, actions of activist shareholders, 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, material weaknesses in internal control over financial reporting, 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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Mika Ware
nvestor Relations
investor.relations@brinker.com
Aisha Fletcher
Media Relations
media.requests@brinker.com
(800) 775-7290
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SOURCE Brinker International, Inc.
Brinker International, Inc. is one of the world's leading casual dining restaurant companies.