Brinker: Reports Year Over Year Increase in Q1/2011 EPS

Dallas / TX. (bi) Brinker International Inc. announced results for the fiscal first quarter ended September 29, 2010. Highlights for Q1/2011 include the following:

• Earnings per diluted share, before special items, increased to 0,21 USD compared to 0,12 USD for the first quarter of fiscal 2010
• On a GAAP basis, earnings per diluted share increased to 0,21 USD from 0,15 USD in the first quarter of the prior year
• Restaurant operating margin improved 190 basis points to 15,0 percent (Restaurant operating margin is defined as Revenues less Cost of sales, Restaurant labor and Restaurant expenses)
• Total revenues decreased 6,0 percent to 654,9 million USD
• Same restaurant sales at company-owned restaurants decreased 4,2 percent consisting of a 5,0 percent decrease at Chili´s and a 1,4 percent increase at Maggiano´s
• Cash flows used in operating activities were 6,6 million USD and capital expenditures totalled 15,6 million USD
• The Company repurchased approximately 5,3 million USD shares of its common stock for 92,7 million USD in the first quarter and repurchased an additional 4,3 million USD shares of its common stock for 83,1 million USD subsequent to the end of the quarter
• The Company paid a dividend of 0,14 USD per share in the first quarter, an increase of 27,3 percent over the prior year quarter

The Company´s fiscal 2010 consisted of 53 weeks compared to 52 weeks for fiscal 2011. The comparable restaurant sales percentages above have not been adjusted to reflect the one week calendar shift. Considering this shift, Brinker comparable restaurant sales were (5,8), (5,2) and (0,8) percent for July, August and September, respectively, resulting in (4,2) percent for the quarter. Management believes the adjusted presentation is a useful gauge of the company´s performance.

Quarterly Operating Performance

Chili´s first quarter revenues of 557,8 million USD represent a 7,7 percent decrease from the prior year period driven by a 5,0 percent decline in comparable restaurant sales. Revenues were also impacted by a net decline in capacity of 3,5 percent due to the sale of 21 restaurants to a franchisee and nine restaurant closures since the first quarter of fiscal 2010. Restaurant operating margin increased compared to the prior year due to favourable cost of sales driven by the positive impact of changes to value offerings and decreased commodity prices for proteins including ribs, beef and chicken. Restaurant labor was positively impacted by the implementation of team service, largely offset by higher restaurant management compensation and sales deleverage. Restaurant expenses decreased primarily due to favourable restaurant supply expenses, partially offset by sales deleverage compared to the prior year.

Maggiano´s first quarter revenues were 81,7 million USD and comparable restaurant sales increased 1,4 percent primarily driven by improved traffic. This increase represents the third consecutive quarterly increase. Restaurant operating margin decreased compared to the prior year primarily due to unfavourable restaurant labor and repairs and maintenance expense.

Royalty and Franchise revenues totalled 15,4 million USD for the quarter, an increase of 3,4 percent over the prior year. International franchise same restaurant sales increased 0,4 percent for the quarter while domestic franchise same restaurant sales decreased 5,8 percent for the same period. Since the first quarter of fiscal 2010, international and domestic franchisees have had net openings of 19 and 29 restaurants, respectively.

Other

General and administrative expense decreased 5,0 million USD for the quarter primarily due to decreased salary expense from lower headcount, increased income from transaction support services provided to On The Border and decreased stock-based compensation expense.

The effective income tax rate decreased to 20,4 percent in the current quarter as compared to 23,4 percent in the same quarter last year primarily due the resolution of certain tax positions which resulted in a positive impact to tax expense in the current quarter. Excluding the impact of special items, the effective income tax rate from continuing operations increased to 27,9 percent in the current quarter from 25,8 percent in the same quarter last year driven primarily by increased earnings.

Info: «Brinker International Reports Year Over Year Increase in First Quarter Fiscal 2011 EPS» (complete press release, available on brinker.com).