Brinker International Inc.
) reported adjusted earnings per share of 60 cents in the third
quarter of 2012, beating the Zacks Consensus Estimate of 56 cents
and the year-ago level of 47 cents per share.
On a GAAP basis, reported earnings stood at 56 cents per share
versus 45 cents per share in the year-ago quarter.
Total revenue, excluding gift card brokerage adjustment of $5.2
million, increased 4.2% year over year to $747.2 million, due to a
4.2% rise in system-wide comparable restaurants sales.
Chili's Grill & Bar restaurant reported revenue of $629.9
million, up 3.5% year over year while Maggiano's sales perked up
3.4% to $94.7 million in the reported quarter. Royalty and
franchise revenue crept up 1.8% to $17.4 million, driven by
year-over-year unit growth.
Comparable restaurant sales at Chili's Grill & Bar
restaurant were up 4.6% for the fourth consecutive quarter;
benefiting from a 1.8% rise in traffic, 1.9% hike in menu price and
0.9% increase from mix shift. Same-restaurant sales at Maggiano's
climbed 3.9% for the ninth time in a row; driven by higher traffic
(up 1.5%), menu price (up 2.2%) and mix-shift (up 0.2%).
Comparable restaurant sales at franchised domestic restaurants
and franchised international restaurants grew 3.8% and 2.6%,
Restaurant operating margin excluding card brokerage adjustment,
expanded 100 basis points (bps) year over year to 19.3%. Despite
the food cost inflation, margins at Chili enhanced on labor savings
initiatives and lower restaurant expense. Restaurant margin at
Maggiano's improved mainly on lower cost of sales and sales
leverage on fixed costs related to higher revenue, partially offset
by commodity pressure.
The restaurant company reported adjusted tax rate of 28.9%
during the quarter compared with 27.1% in the third quarter of
2011. Interest expense decreased $0.6 million year over year due to
lower interest rate.
At quarter end, the company had current assets of $202.4 million
and shareholders' equity of $333.7 million. During the third
quarter, the company repurchased 3.1 million shares for
approximately $82.7 million.
The owner and operator of Chili's Grill & Bar and Maggiano's
Little Italy restaurants reaffirmed its adjusted earnings guidance
range of $1.80 to $1.95 for fiscal 2012. The company continues to
expect full-year revenues and comparable restaurant sales to
increase 2-3% year over year.
During the quarter, the company closed 6 Chili's restaurants and
opened 6 international franchise restaurants.
At the end of the quarter, Brinker operated 1,574 restaurants,
of which 1,282 were Chili's, 44 Maggiano's and 248 franchised
restaurants in the international market. Of the 248 franchised
restaurants in the international market, 247 are Chili's
restaurants and one Maggiano's.
In 2012, Brinker plans to open 37 to 39 restaurants of which 33
to 35 units will be international franchises and 4 Chili's store by
Brinker remains on track to double its EPS by 2015, driven by
margin expansion through disciplined cost management and fifth
consecutive quarter of positive comps and traffic growth. To
attract customers, the company continues to focus on its value
offerings like lunch combo, Happy Hour program and two-course meals
for $20 at Chili's and classic pasta Marco's Meal for Two at
Additionally, the company is boosting shareholder value through
share repurchases as well as dividend payment. However, stiff
competition and food cost inflation are expected to remain
headwinds for the company. The Zacks Consensus Estimates for 2012
and 2013 are pegged at $1.88 and $2.18, respectively.
Brinker, which competes with
BJ's Restaurants, Inc
), currently retains a Zacks #3 Rank, which translates into a
short-term Hold rating. We are also maintaining our long-term
Neutral recommendation on the stock.
BJ'S RESTAURANT (
): Free Stock Analysis Report
BRINKER INTL (
): Free Stock Analysis Report
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