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Brinker International Announces Second Quarter Fiscal 2009 Results
On
Quarterly Revenues
Brinker reported revenues for the 13-week period of
Table 1: Q2 comparable restaurant sales Q2 09 and Q2 08, company and four reported brands; percentage Q2 09 Q2 08 Q2 09 Q2 09 Comparable Comparable Pricing Mix- Sales Sales Impact Shift Brinker Excluding Macaroni Grill (4.5) (2.1) 2.9 (1.7) Brinker International (5.4) (2.4) 2.9 (1.7) Chili's (4.2) (2.4) 3.3 (1.7) On The Border (3.7) (4.3) 2.6 (1.5) Maggiano's (6.9) 1.7 1.6 (2.3) Macaroni Grill (10.6) (4.0) 2.7 (1.0)
Quarterly Operating Performance
Cost of sales, as a percent of revenues, decreased from 28.3 percent in the prior year to 28.2 percent in the second quarter of fiscal 2009. During the quarter, favorable menu price changes more than offset the negative impact on cost of sales of unfavorable commodity prices primarily related to chicken, produce and oils and sauces.
Restaurant expenses, as a percent of revenues, increased to 58.0 percent from 56.8 percent in the prior year primarily driven by sales deleverage on fixed costs and increased utility and labor costs, partially offset by lower pre-opening expenses.
Depreciation and amortization increased
Compared to the prior year, general and administrative expense decreased
Other gains and charges resulted in
Interest expense decreased
The effective income tax rate decreased from a provision of 30.2 percent in the second quarter of fiscal 2008 to a benefit of 51.1 percent in the current quarter. The change in the tax rate was primarily due to the loss on the sale of Macaroni Grill and long-lived asset impairment charges.
Cash Flow and Capital Allocation
Cash flow from operations for the first six months of fiscal 2009
decreased to approximately
Special Items Table 2: Reconciliation of net income (loss), before special items(1) Q2 09 and Q2 08; $ millions and $ per diluted share after-tax Item EPS EPS Q2 09 Q2 09 Q2 08 Q2 08 Net Income (Loss) (21.8) (0.21) 54.5 0.52 Other (Gains) and Charges 53.5 0.52 (10.3) (0.10) ---- ---- ------ ------ Net Income before Special Items 31.7 0.31 44.2 0.42 Macaroni Grill before Special Items (3.8) (0.04) (11.8) (0.11) ----- ------ ------ ------ Adjusted Net Income before Special Items 27.9 0.27 32.4 0.31 ==== ==== ==== ==== (1) The company believes excluding other gains and charges and Macaroni Grill 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.
Web-cast 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 be broadcast live on the Brinker Web site
(http://www.brinker.com) at
Additional financial information, including reconciliation details and debt covenant information, is also available on the Brinker website under the Financial Information section of the Investor tab.
Forward Calendar -- Second Quarter SEC Form 10-Q filing on or beforeFeb. 2, 2009 ; and -- Third quarter earnings release, before market opens, onApr. 21, 2009 .
At the end of the second quarter of fiscal quarter 2009,
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, 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 growth plan, acts of God, governmental regulations, and inflation.
BRINKER INTERNATIONAL, INC. Consolidated Statements of Income (In thousands, except per share amounts) (Unaudited) Thirteen Week Twenty-Six Week Periods Ended Periods Ended ----------------------------------------------- December December December December 24, 26, 24, 26, 2008 2007 2008 2007 ---- ---- ---- ---- Revenues $949,425 $1,029,785 $1,933,832 $2,084,471 -------- ---------- --------- ---------- Operating Costs and Expenses: Cost of sales 268,001 291,339 546,968 583,077 Restaurant expenses 550,696 584,567 1,129,823 1,186,445 Depreciation and amortization 40,647 39,089 81,803 83,996 General and administrative 39,088 41,396 78,852 84,447 Other gains and charges (a) 85,149 (16,343) 90,102 (7,752) ------ -------- ------ ------- Total operating costs and expenses 983,581 940,048 1,927,548 1,930,213 ------- ------- --------- --------- Operating income (loss) (34,156) 89,737 6,284 154,258 Interest expense 10,535 12,476 19,992 25,391 Other, net (193) (845) (1,565) (2,102) ----- ----- ------- ------- Income (loss) before tax expense (benefit) (44,498) 78,106 (12,143) 130,969 Income tax expense (benefit) (22,734) 23,626 (14,160) 38,889 -------- ------ -------- ------ Net income (loss) $(21,764) $54,480 $2,017 $92,080 ========= ======= ====== ======= Basic net income (loss) per share $(0.21) $0.53 $0.02 $0.88 ========= ======== ======= ======== Diluted net income (loss) per share $(0.21) $0.52 $0.02 $0.86 ========= ======== ======= ======== Basic weighted Average shares outstanding 101,841 103,498 101,735 104,981 ======= ======= ======= ======= Diluted weighted Average shares outstanding 101,841 105,339 102,520 107,247 ======= ======= ======= ======= (a) Current year other gains and charges primarily includes long-lived asset impairments of$44.2 million related to the decision to close 35 underperforming restaurants, a loss on the sale of Macaroni Grill of$43.3 million and$3.6 million of gains on sales of other assets in the second quarter of fiscal 2009. In the first quarter of fiscal 2009, other gains and charges primarily included lease termination costs of$2.0 million , uninsured costs related to hurricanes of$1.7 million and expenses related to the pending sale of Macaroni Grill of$1.3 million . Prior year other gains and charges primarily includes a$29.2 million gain on the sale of 76 restaurants to a franchisee,$10.5 million of charges primarily related to the impairment of long-lived assets and$1.9 million of charges related to the sale of Macaroni Grill in the second quarter of fiscal 2008. In the first quarter of fiscal 2008, other gains and charges primarily included$7.8 million of charges related to the expected sale of Macaroni Grill. BRINKER INTERNATIONAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December June 24, 25, 2008 2008 ---- ---- (Unaudited) ASSETS Current assets $386,064 $320,173 Assets held for sale - 135,850 Net property and equipment (a) 1,465,972 1,529,715 Total other assets 248,372 207,384 ------- ------- Total assets $2,100,408 $2,193,122 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities $493,918 $506,443 Liabilities associated with assets held for sale 7,875 18,408 Debt, including current installments 839,926 903,577 Other liabilities 178,645 169,605 Total shareholders' equity 580,044 595,089 ------- ------- Total liabilities and shareholders' equity $2,100,408 $2,193,122 =========== =========== (a) AtDecember 24, 2008 , the company owned the land and buildings for 228 of the 1,064 company-owned restaurants. The net book values of the land and buildings associated with these restaurants totaled$180.6 million and$186.1 million , respectively. BRINKER INTERNATIONAL, INC. RESTAURANT SUMMARY Total Second Second Total Projected Restaurants Quarter Quarter Restaurants Openings Sept. 24, Openings/ Closings/ Dec. 24, Fiscal 2008 Acquisitions Sales 2008 2009 Fiscal Fiscal 2009 2009 --------- ----------- --------- ---- ---- Company-Owned Restaurants: Chili's 894 - 9 885 9 On The Border 131 - 2 129 - Maggiano's 42 1 - 43 2 International(a) 6 1 - 7 2 --- --- --- --- --- 1,073 2 11 1,064 13 ===== = == ===== == Franchise Restaurants: Chili's 410 19 2 427 25-30 On The Border 33 2 4 31 6-8 International(a) 169 13 - 182 34-39 --- -- --- --- ----- 612 34 6 640 65-77 === == = === ===== Total Restaurants: Chili's 1,304 19 11 1,312 34-39 On The Border 164 2 6 160 6-8 Maggiano's 42 1 - 43 2 International 175 14 - 189 36-41 --- -- --- --- ----- 1,685 36 17 1,704 78-90 ===== == == ===== ===== (a) At the end of second quarter fiscal year 2009, international company- owned restaurants by brand were six Chili's and one Maggiano's. International franchise restaurants by brand were 177 Chili's and five On The Border's.
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