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DALLAS, Jan. 24 /PRNewswire-FirstCall/ -- Brinker International, Inc.
(NYSE: EAT) announced fiscal 2006 second-quarter earnings per diluted share
from continuing operations of $0.46 prior to restructuring charges of
$0.01, or reported earnings per diluted share from continuing operations of
$0.45. Excluding incremental equity-based compensation expense of $0.10 and
restructuring charges of $0.01, earnings per diluted share from continuing
operations were $0.56. Excluding restructuring charges, fiscal 2005 second-
quarter earnings per diluted share from continuing operations were $0.46. A
reconciliation of reported income from continuing operations to income from
continuing operations before special items is included in Table 3 below.
Revenue Growth
Brinker reported revenues for the 13-week period of $1,009.1 million, an
increase of 10.9 percent compared with $909.7 million reported for the same
period of fiscal 2005 (1). These revenue gains were primarily driven by a
2.2 percent increase in comparable store sales (see Table 1) and restaurant
capacity growth of 7.1 percent. The company and its franchisees opened
39 restaurants in the second quarter.
Table 1: Q2 comparable store sales
Q2 06 and Q2 05, company and four reported brands; percentage
Q2 06 Q2 05 Q2 06
Comp-Store Comp-Store Price Q2 06
Sales Sales Increase Mix-Shift
Brinker International 2.2 2.6 2.6 1.5
Chilis 2.7 3.2 3.0 1.7
Macaroni Grill 1.1 (2.2) 1.9 1.6
On The Border 0.4 6.4 2.2 0.8
Maggianos 2.6 5.8 2.2 0.2
December 2005 Comparable Store Sales
For the four-week period ending Dec. 28, 2005, comparable store sales
increased 2.7 percent (2) (see Table 2).
Table 2: Month of December comparable store sales
Dec 06 and Dec 05; Percentage
Dec 06 Dec 05 Dec 06
Comp-Store Comp-Store Price Dec 06
Sales Sales Increase Mix-Shift
Brinker International 2.7 6.9 3.2 1.7
Chilis 4.1 6.6 3.9 2.0
Macaroni Grill (1.5) 6.3 1.7 1.3
On The Border (0.6) 9.9 2.2 0.8
Maggianos 4.5 6.8 2.7 1.2
Operating Performance, Before Tax
Cost of sales, as a percent of revenues, decreased from 28.6 percent to
28.5 percent or 10 basis points for the quarter compared to the prior year.
The decrease was due to favorable commodity prices and menu price changes,
partially offset by product mix shifts.
Restaurant expenses, as a percent of revenues, decreased from 55.8 percent
to 55.0 percent, primarily driven by the $17.3 million IRS settlement recorded
in the second quarter fiscal 2005, partially offset by incremental equity-
based compensation of $2.8 million and higher utility rates.
Depreciation and amortization for the second quarter fiscal 2006 compared
to 2005 increased $3.0 million. The change was driven by new restaurants,
asset replacements and remodel additions, partially offset by store closures
and a declining depreciable asset base for older stores.
General and administrative expense increased approximately $9.7 million
for the quarter, which included $8.5 million related to incremental equity-
based compensation in 2006 and an increase in performance-based incentives
period over period.
Share Repurchases
The company repurchased 735,000 shares for approximately $28 million
during the second quarter. The company continues to be active in its share
repurchase program, purchasing $167 million year to date. At the end of the
quarter, approximately $108 million remains available under the companys
share authorizations.
Special Items
Table 3: Reconciliation of income from continuing operations and
description of special items
Q2 06 and Q2 05; $ millions and $ per diluted share after-tax
Income Per Per
Statement $ Share $ Share
Item Line Q2 06 Q2 06 Q2 05 Q2 05
Income from Continuing
Operations 39.4 0.45 40.8 0.44
Equity-Based Compensation (3) Restaurant
Expenses 2.2 0.02
Equity-Based Compensation (3) General &
Administrative 6.6 0.08
Restructuring Charges (4) Restructure
& Other 0.8 0.01 2.8 0.02
Total Special Items 9.6 0.11 2.8 0.02
Income from Continuing
Operations, before
Special Items 49.0 0.56 43.6 0.46
Third Quarter and Full Fiscal Year 2006 Forecast
The companys initial estimate for third quarter fiscal 2006 earnings per
diluted share from continuing operations is $0.57 to $0.59, which includes
incremental equity-based compensation expense of approximately $6.6 million
($5.1 million after tax), or earnings per diluted share of $0.06. Excluding
incremental equity-based compensation, the estimate is $0.63 to $0.65 per
diluted share. This guidance excludes certain gains and charges and assumes
comparable store sales of 3 percent to 4 percent. Weighted average shares are
estimated to be approximately 88 million.
The company anticipates full-year fiscal 2006 earnings per diluted share
from continuing operations to be $2.09 to $2.14, which includes incremental
equity-based compensation expense for the year of approximately $31 million to
$33 million ($24 million to $26 million after tax), or earnings per diluted
share of $0.27 to $0.29. Excluding incremental equity-based compensation, the
estimate is $2.36 to $2.41 per diluted share. This guidance excludes certain
gains and charges and assumes comparable store sales of 3 percent to 4
percent. Weighted average shares are estimated to be approximately 88 million.
Web-cast Information
Investors and interested parties are invited to listen to todays
conference call, as management will provide further details of the quarter and
an outlook for future periods. The call will be broadcast live on the Brinker
Web site (http://www.brinker.com ) at 9 a.m. CST today (Jan. 24). 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 Web site until the
end of the day on Feb. 21, 2006.
Forward Calendar
Period 7 (January) sales -- Feb. 8, 2006, after the market closes.
At the end of the second quarter of fiscal 2006, Brinker International
either owned, operated, or franchised 1,638 restaurants under the names
Chilis Grill & Bar (1,130 units), Romanos Macaroni Grill (238 units),
Maggianos Little Italy (37 units), On The Border Mexican Grill & Cantina (141
units), and Corner Bakery Cafe (92 units).
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, the impact of competition, the impact of acquisitions and
divestitures, the seasonality of the companys business, adverse weather
conditions, future commodity prices, fuel and utility costs and availability,
terrorists acts, consumer perception of food safety, changes in consumer
taste, changes in demographic trends, availability of employees, unfavorable
publicity, the companys ability to meet its growth plan, acts of God,
governmental regulations, and inflation.
(1) Revenues exclude Corner Bakery.
(2) Comparable store sales exclude Corner Bakery sales.
(3) This incremental expense relates to adopting FAS 123(R) at the
beginning of fiscal year 2006
(4) Restructuring charges consist of expenses associated with impairments
and restaurant closures.
BRINKER INTERNATIONAL, INC.
Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Thirteen Week Twenty-Six Week
Periods Ended Periods Ended
Dec. 28, Dec. 29, Dec. 28, Dec. 29,
2005 2004 2005 2004
Revenues $1,009,083 $909,721 $1,984,979 $1,780,686
Operating Costs
and Expenses:
Cost of sales 287,305 259,791 562,463 502,970
Restaurant
expenses (A) 555,371 507,759 1,098,143 990,518
Depreciation and
amortization 47,602 44,617 94,313 88,571
General and
administrative (B) 51,667 41,951 98,805 78,178
Restructure charges
and other impairments 1,312 4,128 2,479 50,832
Total operating
costs and expenses 943,257 858,246 1,856,203 1,711,069
Operating income 65,826 51,475 128,776 69,617
Interest expense 6,198 7,054 11,565 14,146
Other, net (20) 1,093 (184) 1,535
Income before income tax
(expense) benefit 59,648 43,328 117,395 53,936
Income tax (expense)
benefit (C) (20,278) (2,508) (39,583) 2,560
Income from continuing
operations 39,370 40,820 77,812 56,496
Income (loss) from
discontinued operations,
net of taxes 3,507 583 (3,181) (1,184)
Net income $42,877 $41,403 $74,631 $55,312
Basic net income
per share:
Income from continuing
operations $0.46 $0.47 $0.90 $0.64
Income (loss) from
discontinued operations $0.04 $0.00 $(0.04) $(0.02)
Net income per share $0.50 $0.47 $0.86 $0.62
Diluted net income
per share:
Income from continuing
operations $0.45 $0.44 $0.88 $0.60
Income (loss) from
discontinued operations $0.04 $0.00 $(0.04) $(0.01)
Net income per share $0.49 $0.44 $0.84 $0.59
Basic weighted average
shares outstanding 85,980 87,505 86,909 88,633
Diluted weighted average
shares outstanding 87,618 96,471 88,417 97,599
(A) Current year restaurant expenses include incremental equity-based
compensation of $2.8 million and $5.2 million for the second quarter
and year-to-date, respectively.
Prior year restaurant expenses include a $17.3 million charge
recorded in the second quarter related to the IRS settlement and a
$3.8 million gain recorded in the first quarter as a result of the
sale of nine Chilis to a franchise partner.
(B) Current year general and administrative expenses include incremental
equity-based compensation of $8.5 million and $13.1 million for the
second quarter and year-to-date, respectively.
(C) Prior year income tax (expense) benefit includes a $16.9 million
benefit related to the IRS settlement.
BRINKER INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 28, June 29,
2005 2005
(Unaudited)
ASSETS
Current assets of continuing operations $269,414 $233,123
Current assets of discontinued operations 80,875 79,842
Net property and equipment 1,721,665 1,646,466
Total other assets 192,891 196,693
Total assets $2,264,845 $2,156,124
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities of continuing operations $540,761 $419,564
Current liabilities of discontinued operations 15,798 10,400
Long-term debt, less current installments 489,686 406,505
Other liabilities 180,744 219,373
Total shareholders equity 1,037,856 1,100,282
Total liabilities and shareholders equity $2,264,845 $2,156,124
BRINKER INTERNATIONAL, INC.
UNITS SUMMARY
Second Second
Quarter Quarter
Total Openings/ Closings/ Total Projected
Units Acquisitions Sales Units Openings
Sept. 28, Fiscal Fiscal Dec. 28, Fiscal
2005 2006(D) 2006(D) 2005 2006
Company-Owned Units:
Chilis 830 38 (1) 867 97-100
Macaroni Grill 223 1 --- 224 6-7
Maggianos 35 2 --- 37 4-5
On The Border 119 4 (1) 122 6-8
Corner Bakery(E) 90 1 (2) 89 7-9
1,297 46 (4) 1,339 120-129
JV/Franchise Units:
Chilis 270 8 (15) 263 25-30
Macaroni Grill 14 1 (1) 14 4-5
On The Border 19 --- --- 19 3-4
Corner Bakery(E) 3 --- --- 3 0-1
306 9 (16) 299 32-40
Total Units:
Chilis 1,100 46 (16) 1,130 122-130
Macaroni Grill 237 2 (1) 238 10-12
Maggianos 35 2 --- 37 4-5
On The Border 138 4 (1) 141 9-12
Corner Bakery(E) 93 1 (2) 92 7-10
1,603 55 (20) 1,638 152-169
(D) During the second quarter of fiscal 2006, the company acquired
fifteen Chilis restaurants and one Macaroni Grill restaurant from
two of its franchisees. The company and its franchisees opened a
total of thirty-nine new restaurants during the quarter ended
December 28, 2005.
(E) In September 2005, the company entered into an agreement to sell
Corner Bakery. As a result, Corner Bakery is presented as
discontinued operations.
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