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 21, 2015 | By: | /s/ Wyman T. Roberts | |
Wyman T. Roberts, | |||
Chief Executive Officer and | |||
President and President of Chili’s Grill and Bar | |||
(Principal Executive Officer) |
• | Earnings per diluted share, excluding special items, increased 11.9 percent to $0.94 compared to $0.84 for the third quarter of fiscal 2014 |
• | On a GAAP basis, earnings per diluted share increased 24.4 percent to $1.02 compared to $0.82 for the third quarter of fiscal 2014 |
• | Brinker International company sales increased 3.0 percent to $761.7 million and comparable restaurant sales at company-owned restaurants increased 1.7 percent. Comparable restaurant sales increased 2.6 percent excluding the impact of Christmas Day moving to the third quarter |
• | Chili’s company-owned comparable restaurant sales increased 1.9 percent |
• | Maggiano’s comparable restaurant sales increased 0.1 percent, representing the 21st consecutive quarterly increase |
• | Chili's franchise comparable restaurant sales increased 2.5 percent which includes a 3.1 percent increase for U.S. franchise restaurants and a 1.2 percent increase for international franchise restaurants |
• | Restaurant operating margin,1 as a percent of company sales, improved approximately 30 basis points to 18.9 percent compared to 18.6 percent for the third quarter of fiscal 2014 |
• | For the first nine months of fiscal 2015, cash flows provided by operating activities were $274.9 million and capital expenditures totaled $107.1 million. Free cash flow2 was approximately $167.8 million |
• | The company repurchased approximately 1.7 million shares of its common stock for $104.2 million in the third quarter and a total of approximately 3.9 million shares for $217.0 million year-to-date |
• | The company paid a dividend of 28 cents per share in the third quarter, an increase of 17 percent over the prior year third quarter, and declared a dividend of 28 cents per share to be paid in the fourth quarter |
Q3 15 | Q3 14 | |||||
Brinker International | 1.7 | 0.7 | ||||
Chili’s Company-Owned | ||||||
Comparable Restaurant Sales | 1.9 | 0.7 | ||||
Pricing Impact | 0.6 | 1.1 | ||||
Mix-Shift | 1.5 | 0.8 | ||||
Traffic | (0.2 | ) | (1.2 | ) | ||
Maggiano’s | ||||||
Comparable Restaurant Sales | 0.1 | 0.2 | ||||
Pricing Impact | 2.5 | 1.5 | ||||
Mix-Shift | (1.1 | ) | (0.4 | ) | ||
Traffic | (1.3 | ) | (0.9 | ) | ||
Chili's Franchise1 | 2.5 | 0.2 | ||||
U.S. Comparable Restaurant Sales | 3.1 | 0.1 | ||||
International Comparable Restaurant Sales | 1.2 | 0.6 | ||||
Chili's Domestic2 | 2.2 | 0.5 | ||||
System-wide3 | 2.0 | 0.5 |
1 | 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 franchise comparable restaurant sales provides investors information regarding brand performance that is relevant to current operations and may impact future restaurant development. | |
2 | Chili's Domestic comparable restaurant sales percentages are derived from sales generated by company-owned and franchise operated Chili's restaurants in the United States. | |
3 | 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. |
Q3 15 | EPS Q3 15 | Q3 14 | EPS Q3 14 | |||||||||
Net Income | 65.4 | 1.02 | 56.3 | 0.82 | ||||||||
Other (Gains) and Charges, net of taxes1 | (5.2 | ) | (0.08 | ) | 1.3 | 0.02 | ||||||
Net Income excluding Special Items | 60.2 | 0.94 | 57.6 | 0.84 |
1 | Pre-tax Other gains and charges included a gain of $8.5 million and a charge of $2.1 million in the third quarter of fiscal 2015 and 2014, respectively. See footnote "b" to the consolidated statements of comprehensive income for additional details. |
Thirteen Week Periods Ended | Thirty-Nine Week Periods Ended | |||||||||||||||
March 25, 2015 | March 26, 2014 | March 25, 2015 | March 26, 2014 | |||||||||||||
Revenues: | ||||||||||||||||
Company sales | $ | 761,736 | $ | 739,200 | $ | 2,166,368 | $ | 2,088,087 | ||||||||
Franchise and other revenues (a) | 22,479 | 20,093 | 71,763 | 61,528 | ||||||||||||
Total revenues | 784,215 | 759,293 | 2,238,131 | 2,149,615 | ||||||||||||
Operating costs and expenses: | ||||||||||||||||
Company restaurants (excluding depreciation and amortization) | ||||||||||||||||
Cost of sales | 203,960 | 195,439 | 582,507 | 561,276 | ||||||||||||
Restaurant labor | 240,105 | 233,890 | 695,114 | 672,525 | ||||||||||||
Restaurant expenses | 173,611 | 172,459 | 528,047 | 511,293 | ||||||||||||
Company restaurant expenses | 617,676 | 601,788 | 1,805,668 | 1,745,094 | ||||||||||||
Depreciation and amortization | 36,599 | 34,218 | 108,213 | 100,912 | ||||||||||||
General and administrative | 35,194 | 34,009 | 100,488 | 98,792 | ||||||||||||
Other gains and charges (b) | (8,477 | ) | 2,088 | 747 | 4,315 | |||||||||||
Total operating costs and expenses | 680,992 | 672,103 | 2,015,116 | 1,949,113 | ||||||||||||
Operating income | 103,223 | 87,190 | 223,015 | 200,502 | ||||||||||||
Interest expense | 7,361 | 7,068 | 21,709 | 21,128 | ||||||||||||
Other, net | (454 | ) | (693 | ) | (1,568 | ) | (1,736 | ) | ||||||||
Income before provision for income taxes | 96,316 | 80,815 | 202,874 | 181,110 | ||||||||||||
Provision for income taxes | 30,889 | 24,552 | 63,403 | 55,891 | ||||||||||||
Net income | $ | 65,427 | $ | 56,263 | $ | 139,471 | $ | 125,219 | ||||||||
Basic net income per share | $ | 1.04 | $ | 0.85 | $ | 2.19 | $ | 1.88 | ||||||||
Diluted net income per share | $ | 1.02 | $ | 0.82 | $ | 2.14 | $ | 1.83 | ||||||||
Basic weighted average shares outstanding | 62,891 | 66,479 | 63,719 | 66,661 | ||||||||||||
Diluted weighted average shares outstanding | 64,091 | 68,342 | 65,108 | 68,591 | ||||||||||||
Other comprehensive loss: | ||||||||||||||||
Foreign currency translation adjustment (c) | $ | (2,847 | ) | $ | (1,108 | ) | $ | (7,183 | ) | $ | (1,862 | ) | ||||
Other comprehensive loss | (2,847 | ) | (1,108 | ) | (7,183 | ) | (1,862 | ) | ||||||||
Comprehensive income | $ | 62,580 | $ | 55,155 | $ | 132,288 | $ | 123,357 | ||||||||
(a) | Franchise and other revenues primarily includes royalties, development fees and franchise fees, banquet service charge income, gift card activity (breakage and discounts), tabletop device revenue, Chili's retail food product royalties and delivery fee income. Beginning in fiscal 2015, income primarily related to Maggiano's delivery is included in Franchise and other revenues on the consolidated statements of comprehensive income. This income was previously included in Restaurant expenses. The prior year consolidated statements of comprehensive income has been adjusted to conform to the fiscal 2015 presentation. This adjustment has no effect on net income previously reported. |
(b) | Other gains and charges include: |
Thirteen Week Periods Ended | Thirty-Nine Week Periods Ended | ||||||||||||||
March 25, 2015 | March 26, 2014 | March 25, 2015 | March 26, 2014 | ||||||||||||
Litigation | $ | (8,553 | ) | $ | — | $ | (2,753 | ) | $ | — | |||||
Restaurant impairment charges | — | — | 747 | 1,285 | |||||||||||
Restaurant closure charges | 76 | 1,224 | 1,457 | 2,330 | |||||||||||
Loss (Gain) on the sale of assets, net | — | — | 1,093 | (579 | ) | ||||||||||
Impairment of liquor licenses | — | — | 175 | — | |||||||||||
Other | — | 864 | 28 | 1,279 | |||||||||||
$ | (8,477 | ) | $ | 2,088 | $ | 747 | $ | 4,315 |
(c) | The foreign currency translation adjustment included in comprehensive income on the consolidated statements of comprehensive income represents the unrealized impact of translating the financial statements of the Canadian restaurants and the Mexican joint venture from their respective functional currencies to U.S. dollars. This amount is not included in net income and would only be realized upon disposition of the businesses. |
March 25, 2015 | June 25, 2014 | |||||||
ASSETS | ||||||||
Current assets | $ | 190,046 | $ | 210,854 | ||||
Net property and equipment (a) | 1,037,425 | 1,056,454 | ||||||
Total other assets | 209,848 | 223,296 | ||||||
Total assets | $ | 1,437,319 | $ | 1,490,604 | ||||
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | ||||||||
Current installments of long-term debt | 3,115 | $ | 27,884 | |||||
Other current liabilities | 403,526 | 438,226 | ||||||
Long-term debt, less current installments | 933,207 | 832,302 | ||||||
Other liabilities | 129,600 | 129,098 | ||||||
Total shareholders’ (deficit) equity | (32,129 | ) | 63,094 | |||||
Total liabilities and shareholders’ (deficit) equity | $ | 1,437,319 | $ | 1,490,604 |
(a) | At March 25, 2015, the company owned the land and buildings for 189 of the 889 company-owned restaurants. The net book values of the land and buildings associated with these restaurants totaled $142.2 million and $115.3 million, respectively. |
Thirty-Nine Week Periods Ended | ||||||||
March 25, 2015 | March 26, 2014 | |||||||
Cash Flows From Operating Activities: | ||||||||
Net income | $ | 139,471 | $ | 125,219 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 108,213 | 100,912 | ||||||
Stock-based compensation | 11,587 | 12,990 | ||||||
Restructure charges and other impairments | 8,402 | 3,836 | ||||||
Net loss on disposal of assets | 3,819 | 3,208 | ||||||
Changes in assets and liabilities | 3,415 | 30,935 | ||||||
Net cash provided by operating activities | 274,907 | 277,100 | ||||||
Cash Flows from Investing Activities: | ||||||||
Payments for property and equipment | (107,108 | ) | (113,980 | ) | ||||
Proceeds from sale of assets | 1,950 | 833 | ||||||
Net cash used in investing activities | (105,158 | ) | (113,147 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Borrowings on revolving credit facility | 442,750 | 98,000 | ||||||
Purchases of treasury stock | (217,019 | ) | (191,811 | ) | ||||
Payments on long-term debt | (188,758 | ) | (19,890 | ) | ||||
Payments on revolving credit facility | (177,000 | ) | (40,000 | ) | ||||
Payments of dividends | (53,248 | ) | (47,556 | ) | ||||
Excess tax benefits from stock-based compensation | 16,920 | 17,972 | ||||||
Proceeds from issuances of treasury stock | 14,965 | 24,574 | ||||||
Payments for deferred financing costs | (2,501 | ) | — | |||||
Net cash used in financing activities | (163,891 | ) | (158,711 | ) | ||||
Net change in cash and cash equivalents | 5,858 | 5,242 | ||||||
Cash and cash equivalents at beginning of period | 57,685 | 59,367 | ||||||
Cash and cash equivalents at end of period | $ | 63,543 | $ | 64,609 |
Third Quarter Openings Fiscal 2015 | Total Restaurants March 25, 2015 | Projected Openings Fiscal 2015 | |||||||
Company-Owned Restaurants: | |||||||||
Chili’s Domestic | 2 | 827 | 8-10 | ||||||
Chili’s International | — | 13 | 1 | ||||||
Maggiano’s | — | 49 | 3 | ||||||
2 | 889 | 12-14 | |||||||
Franchise Restaurants: | |||||||||
Chili’s Domestic | 1 | 435 | 5 | ||||||
Chili's International | 2 | 305 | 28-30 | ||||||
3 | 740 | 33-35 | |||||||
Total Restaurants: | |||||||||
Chili’s Domestic | 3 | 1,262 | 13-15 | ||||||
Chili's International | 2 | 318 | 29-31 | ||||||
Maggiano’s | — | 49 | 3 | ||||||
5 | 1,629 | 45-49 |
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