Delaware | 1-10275 | 75-1914582 | ||
(State of Incorporation) | (Commission File Number) | (IRS Employment Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)). |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)). |
BRINKER INTERNATIONAL, INC. | |||
Dated: April 23, 2014 | By: | /s/ Wyman T. Roberts | |
Wyman T. Roberts, | |||
Chief Executive Officer and | |||
President and President of Chili’s Grill and Bar | |||
(Principal Executive Officer) |
Contacts: Maureen Locus, Media Relations | Chris Bremer, Investor Relations | ||
(800) 775-7290 | (972) 980-9917 |
• | Earnings per diluted share, excluding special items, increased 16.7 percent to $0.84 compared to $0.72 for the third quarter of fiscal 2013 (see non-GAAP reconciliation below) |
• | On a GAAP basis, earnings per diluted share increased 15.5 percent to $0.82 compared to $0.71 for the third quarter of fiscal 2013 |
• | Company sales increased 2.0 percent to $739.2 million and restaurant operating margin1 improved approximately 80 basis points to 18.7 percent compared to 17.9 percent for the third quarter of fiscal 2013 |
• | Brinker International comparable restaurant sales at company-owned restaurants increased 0.7 percent |
• | Chili’s domestic comparable restaurant sales2 includes a 0.7 percent increase for company-owned restaurants and a 0.1 percent increase for franchise operated restaurants |
• | Chili's international franchise comparable restaurant sales increased 0.6 percent, representing the 17th consecutive quarterly increase |
• | Maggiano’s comparable restaurant sales increased 0.2 percent, representing the 17th consecutive quarterly increase |
• | For the first nine months of fiscal 2014, cash flows provided by operating activities were $277.1 million and capital expenditures totaled $114.0 million |
• | The company repurchased approximately 1.9 million shares of its common stock for $98.7 million in the third quarter and a total of approximately 4.1 million shares for $191.8 million year-to-date |
• | The company paid a dividend of 24 cents per share in the third quarter, an increase of 20 percent over the prior year third quarter |
Jan | Feb | March | Q3 14 | Q3 13 | |||||||||||
Brinker International | 0.1 | 1.3 | 0.7 | 0.7 | (0.9 | ) | |||||||||
Chili’s Company-Owned1 | |||||||||||||||
Comparable Restaurant Sales | 0.0 | 1.5 | 0.9 | 0.7 | (1.1 | ) | |||||||||
Pricing Impact | 1.1 | 1.2 | 1.2 | 1.1 | 1.5 | ||||||||||
Mix-Shift | 0.0 | 1.5 | 1.1 | 0.8 | 0.6 | ||||||||||
Traffic | (1.1 | ) | (1.2 | ) | (1.4 | ) | (1.2 | ) | (3.2 | ) | |||||
Maggiano’s | |||||||||||||||
Comparable Restaurant Sales | 0.8 | 0.3 | (0.8 | ) | 0.2 | 0.4 | |||||||||
Pricing Impact | 1.6 | 1.3 | 1.5 | 1.5 | 1.6 | ||||||||||
Mix-Shift | 0.4 | 0.1 | (2.2 | ) | (0.4 | ) | (0.2 | ) | |||||||
Traffic | (1.2 | ) | (1.1 | ) | (0.1 | ) | (0.9 | ) | (1.0 | ) | |||||
Franchise2 | 0.2 | 1.3 | |||||||||||||
U.S. Comparable Restaurant Sales | 0.1 | (0.3 | ) | ||||||||||||
International Comparable Restaurant Sales | 0.6 | 5.1 | |||||||||||||
Domestic3 | 0.5 | (0.8 | ) | ||||||||||||
System-wide4 | 0.5 | (0.2 | ) |
1 | Chili's company-owned comparable restaurant sales do not include sales generated by the 11 restaurants acquired in Canada in June 2013. Acquired or newly opened restaurants are not included in this calculation until 18 months of operations are completed. | |
2 | Revenues generated by franchisees are not included in revenues on the consolidated statements of comprehensive income; however, we generate royalty revenue and advertising fees based on franchisee revenues, where applicable. We believe including franchisee comparable restaurant sales provides investors information regarding brand performance that is relevant to current operations and may impact future restaurant development. | |
3 | Domestic comparable restaurant sales percentages are derived from sales generated by company-owned and franchise operated Chili's restaurants in the United States. | |
4 | 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 franchise operated restaurants. |
1 | Royalty revenues are recognized based on the sales generated and reported to the company by franchisees. |
Q3 14 | EPS Q3 14 | Q3 13 | EPS Q3 13 | |||||||||
Net Income | 56.3 | 0.82 | 52.0 | 0.71 | ||||||||
Other (Gains) and Charges, net of taxes1 | 1.3 | 0.02 | 0.9 | 0.01 | ||||||||
Net Income excluding Special Items | 57.6 | 0.84 | 52.9 | 0.72 |
1 | Pre-tax Other gains and charges were $2.1 million and $1.6 million in the third quarter of fiscal 2014 and 2013, respectively. |
- | SEC Form 10-Q for third quarter fiscal 2014 filing on or before May 5, 2014; and |
- | Fourth quarter earnings release, before market opens, Aug. 7, 2014. |
Thirteen Week Periods Ended | Thirty-Nine Week Periods Ended | |||||||||||||||
March 26, 2014 | March 27, 2013 | March 26, 2014 | March 27, 2013 | |||||||||||||
Revenues: | ||||||||||||||||
Company sales | $ | 739,200 | $ | 724,693 | $ | 2,088,087 | $ | 2,057,490 | ||||||||
Franchise and other revenues (a) | 19,208 | 18,066 | 58,640 | 58,540 | ||||||||||||
Total revenues | 758,408 | 742,759 | 2,146,727 | 2,116,030 | ||||||||||||
Operating costs and expenses: | ||||||||||||||||
Company restaurants (excluding depreciation and amortization) | ||||||||||||||||
Cost of sales | 195,439 | 198,316 | 561,276 | 567,602 | ||||||||||||
Restaurant labor | 233,890 | 231,822 | 672,525 | 667,865 | ||||||||||||
Restaurant expenses | 171,574 | 164,537 | 508,405 | 489,781 | ||||||||||||
Company restaurant expenses | 600,903 | 594,675 | 1,742,206 | 1,725,248 | ||||||||||||
Depreciation and amortization | 34,218 | 33,222 | 100,912 | 98,830 | ||||||||||||
General and administrative | 34,009 | 33,986 | 98,792 | 102,289 | ||||||||||||
Other gains and charges (c) | 2,088 | 1,550 | 4,315 | 2,227 | ||||||||||||
Total operating costs and expenses | 671,218 | 663,433 | 1,946,225 | 1,928,594 | ||||||||||||
Operating income | 87,190 | 79,326 | 200,502 | 187,436 | ||||||||||||
Interest expense | 7,068 | 7,085 | 21,128 | 21,040 | ||||||||||||
Other, net | (693 | ) | (573 | ) | (1,736 | ) | (2,096 | ) | ||||||||
Income before provision for income taxes | 80,815 | 72,814 | 181,110 | 168,492 | ||||||||||||
Provision for income taxes | 24,552 | 20,863 | 55,891 | 51,500 | ||||||||||||
Net income | $ | 56,263 | $ | 51,951 | $ | 125,219 | $ | 116,992 | ||||||||
Basic net income per share | $ | 0.85 | $ | 0.73 | $ | 1.88 | $ | 1.61 | ||||||||
Diluted net income per share | $ | 0.82 | $ | 0.71 | $ | 1.83 | $ | 1.56 | ||||||||
Basic weighted average shares outstanding | 66,479 | 71,067 | 66,661 | 72,511 | ||||||||||||
Diluted weighted average shares outstanding | 68,342 | 73,341 | 68,591 | 74,873 | ||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||
Foreign currency translation adjustment (b) | $ | (1,108 | ) | $ | — | $ | (1,862 | ) | $ | — | ||||||
Other comprehensive loss | (1,108 | ) | — | (1,862 | ) | — | ||||||||||
Comprehensive income | $ | 55,155 | $ | 51,951 | $ | 123,357 | $ | 116,992 |
(a) | Franchise and other revenues primarily includes royalties, development fees and franchise fees, banquet service charge income, and gift card activity (breakage and discounts). |
(b) | The company’s Canadian operation uses the Canadian dollar as its functional currency. The foreign currency translation adjustment included in the company’s comprehensive income represents the unrealized impact of translating the financial statements of the Canadian entity to U.S. dollars. This amount is not included in net income and would only be realized upon disposition of the business. |
(c) | Other gains and charges include: |
Thirteen Week Periods Ended | Thirty-Nine Week Periods Ended | ||||||||||||||
March 26, 2014 | March 27, 2013 | March 26, 2014 | March 27, 2013 | ||||||||||||
Restaurant impairment charges | $ | — | $ | — | $ | 1,285 | $ | 661 | |||||||
Restaurant closure charges | 1,224 | 305 | 2,330 | 2,887 | |||||||||||
Severance and other benefits | 717 | 1,269 | 1,110 | 1,269 | |||||||||||
Gains on the sale of assets, net | — | (81 | ) | (579 | ) | (2,430 | ) | ||||||||
Other | 147 | 57 | 169 | (160 | ) | ||||||||||
$ | 2,088 | $ | 1,550 | $ | 4,315 | $ | 2,227 |
March 26, 2014 | June 26, 2013 | |||||||
ASSETS | ||||||||
Current assets | $ | 195,156 | $ | 198,591 | ||||
Net property and equipment (a) | 1,037,409 | 1,035,815 | ||||||
Total other assets | 217,513 | 218,197 | ||||||
Total assets | $ | 1,450,078 | $ | 1,452,603 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current installments of long-term debt | $ | 27,810 | $ | 27,596 | ||||
Current liabilities | 388,484 | 362,615 | ||||||
Long-term debt, less current installments | 817,259 | 780,121 | ||||||
Other liabilities | 128,419 | 132,914 | ||||||
Total shareholders’ equity | 88,106 | 149,357 | ||||||
Total liabilities and shareholders’ equity | $ | 1,450,078 | $ | 1,452,603 |
(a) | At March 26, 2014, the company owned the land and buildings for 190 of the 880 company-owned restaurants. The net book values of the land and buildings associated with these restaurants totaled $142.9 million and $118.2 million, respectively. |
Thirty-Nine Week Periods Ended | ||||||||
March 26, 2014 | March 27, 2013 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 125,219 | $ | 116,992 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 100,912 | 98,830 | ||||||
Stock-based compensation | 12,990 | 12,909 | ||||||
Restructure charges and other impairments | 3,836 | 3,792 | ||||||
Net loss on disposal of assets | 3,208 | 1,115 | ||||||
Changes in assets and liabilities | 30,935 | (11,002 | ) | |||||
Net cash provided by operating activities | 277,100 | 222,636 | ||||||
Cash Flows from Investing Activities: | ||||||||
Payments for property and equipment | (113,980 | ) | (98,690 | ) | ||||
Proceeds from sale of assets | 833 | 6,535 | ||||||
Net cash used in investing activities | (113,147 | ) | (92,155 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Purchases of treasury stock | (191,811 | ) | (191,799 | ) | ||||
Borrowings on revolving credit facility | 98,000 | 110,000 | ||||||
Payments on revolving credit facility | (40,000 | ) | — | |||||
Payments of dividends | (47,556 | ) | (42,161 | ) | ||||
Excess tax benefits from stock-based compensation | 17,972 | 7,811 | ||||||
Payments on long-term debt | (19,890 | ) | (19,785 | ) | ||||
Proceeds from issuances of treasury stock | 24,574 | 32,042 | ||||||
Net cash used in financing activities | (158,711 | ) | (103,892 | ) | ||||
Net change in cash and cash equivalents | 5,242 | 26,589 | ||||||
Cash and cash equivalents at beginning of period | 59,367 | 59,103 | ||||||
Cash and cash equivalents at end of period | $ | 64,609 | $ | 85,692 |
Third Quarter Openings Fiscal 2014 | Total Restaurants March 26, 2014 | Projected Openings Fiscal 2014 | |||||||
Company-Owned Restaurants: | |||||||||
Chili’s Domestic | 2 | 823 | 6-8 | ||||||
Chili’s International | — | 12 | 2-4 | ||||||
Maggiano’s | — | 45 | 1-2 | ||||||
2 | 880 | 9-14 | |||||||
Franchise Restaurants: | |||||||||
Chili’s Domestic | — | 441 | 3 | ||||||
Chili's International | 10 | 287 | 31-33 | ||||||
10 | 728 | 34-36 | |||||||
Total Restaurants: | |||||||||
Chili’s Domestic | 2 | 1,264 | 9-11 | ||||||
Chili's International | 10 | 299 | 33-37 | ||||||
Maggiano’s | — | 45 | 1-2 | ||||||
12 | 1,608 | 43-50 |
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